The Irish economy is flying and our public finances have weathered the two-year pandemic much better than we could have expected thanks to our strong export performance and record corporation tax receipts.
But our national debt continues to rise sharply. Latest figures from the Central Bank of Ireland show that the State’s national debt stood at €237.2 billion at the end of last year, up from €219.5 billion 12 months earlier, as spending on pandemic-related supports continued to weigh on the public finances.
The headline total equates to more than €47,000 for every individual in the State, and over €95,000 per worker. These are sobering figures and equate to being one of the highest per capita debts in the world.
In a recent quarterly bulletin, the Central Bank said the general government debt is estimated to have fallen to 102 per cent of GNI*, the Central Statistics Office’s bespoke measure of national income, last year.
Borrowing rates
“Favourable debt dynamics” are expected to lead to further improvements over the medium term, with the ratio projected to fall to below its pre-Covid level this year before declining to 84.9per cent by 2024, it said.
This primarily reflected the quicker return to a primary surplus, with Irish sovereign borrowing rates at low levels, supported by the European Central Bank’s Pandemic Emergency Purchase Programme. The National Treasury Management Agency also continues to hold large cash balances, assisting sovereign funding flexibility.
The Government’s year-end budget deficit – the difference between what it spends and what it takes in in taxes – is expected to be under €10 billion this year compared to an earlier forecast of €20 billion.
These are positive indicators although the outlook on interest rates is not so favourable. This is bad news for future generations who will ultimately have to pick up the tab for refinancing this mountain of debt, while also having to shoulder a sharp rise in the cost of the State pension, unless politicians bite the bullet on reforms.
