Government debt as a percentage of gross domestic product (GDP) fell to 109 per cent last year on the back of better-than-expected economic growth.

Figures from the Central Statistics Office (CSO) show Ireland's national debt stood at €203 billion at the end of 2014, down from €215 billion or 123 per cent of GDP the previous year.

The improvement was put down to a combination of increased GDP and the early repayment of a portion of IMF loans.

The Irish economy grew by 4.8 per cent in 2014, outstripping even the most optimistic predictions. At the same time, the Government secured permission from its bailout lenders to pay off €18 billion of its €22.5 billion IMF debt early.

Minister for Finance Michael Noonan has stated he now expects the State's debt to be fall below 100 per cent of GDP by 2018, bringing Ireland close to the European average.

Under the terms of the EU’s fiscal compact treaty, Ireland is committed to eventually reducing its ratio of debt to GDP to 60 per cent over the longer term.

The CSO figures show the general Government spending deficit was -€7.6 billion or -4.1 per cent of GDP in 2014, down from the -€10 billion (5.8 per cent of GDP) recorded in 2013.

Government revenue increased by over 6 per cent from €60.9 billion million in 2013 to €65 billion last year, while expenditure increased by 1.7 per cent from €71 billion to €72.3 billion over the same period.

The changes in revenue and expenditure were driven by increased tax and social contribution revenues and increased capital expenditure, the CSO said.

Taxes and social contributions continue to form the largest component of revenue over the period, representing 88 per cent of total government revenue in 2014, with social benefits, the biggest expenditure category, accounting for almost 39 per cent of government spending in 2014.