The National Treasury Management Agency is getting ready to fund social welfare and pension costs from 2025 onwards, writes Caroline Madden

January is invariably a bleak time of year. The Christmas cheer that sustained us through the winter so far has evaporated, along with a large chunk of many people's disposable income.

For those of us who got caught up in the pre-Christmas spending frenzy (not to mention the post-Christmas sales), cards bearing cheery season's greetings will soon be replaced by nasty credit card bills popping through the letter box to remind us of our moments of weakness.

The most recent figures available from the Central Bank show that by the end of November, Irish consumers' lavish spending habits had driven the total level of credit card indebtedness to €2.58 billion.

The rate at which total private sector borrowing (eg credit cards, loans, overdrafts and mortgages) grew last year was considered by many economists to be worrying and unsustainable, particularly when compared to the borrowing habits of our European neighbours.

Interestingly, while Irish individuals have been busy saddling themselves with ever-increasing levels of debt, the State's finances have never looked healthier. The National Treasury Management Agency (NTMA) recently announced that Ireland's national debt fell last year - for the first time since 2001.

The NTMA was set up in 1990 to manage Ireland's national debt (ie to borrow money for the Government and to manage this debt), which at the time was one of the highest in Europe.

Since then, the national debt burden has decreased significantly. In fact, Ireland now has one of the lowest levels of indebtedness relative to gross domestic product - the total market value of all goods and services produced in the country - in Europe.

At the start of 2006, the national debt exceeded €38 billion, and the Government forecast that it would have to borrow another €2.9 billion during the year to balance its books.

According to the Department of Finance's final calculations published last week, the Exchequer actually produced a budget surplus of €2.265 billion in 2006, bringing down the national debt level to less than €36 billion.

Now, it's easy enough to see how you might unearth a €20 note, for example, months after you stashed it away in some forgotten hiding place.

But you might well wonder how the Government ended up with €5.2 billion more than expected last year.

The Department of Finance explained that a more pronounced slowdown in the property market had been anticipated than the slight cooling off which actually materialised. As a result, the tax receipts generated from property-related transactions - for example, capital gains tax and stamp duty - exceeded even the Revenue Commissioner's expectations.

While managing the State's national debt is the NTMA's main raison d'etre, it also runs the National Pensions Reserve Fund (NPRF).

Pensions are unlikely to be uppermost in your thoughts when you're still in school and may not yet have entered the workforce.

But it is estimated that by the middle of the century, when your working life will probably be drawing to a close, there will be fewer than two people at work for every retired person. This compares to the current level of 4.3 people working for every one retired person, and is a knock-on effect of Ireland's ageing population.

In 2001, the NPRF was set up in light of these projected demographic changes, with the aim of funding social welfare and pension costs from 2025 onwards.

It was predicted in 2001 that unless such a fund was put in place, taxes would have to rise dramatically to meet the increased pension costs, or the value of pensions would have to be reduced.

"The fund will smooth the Exchequer burden arising from our additional pension commitments over a very long time," the NPRF committee explained.

By the end of 2006, the fund stood at €18.877 billion.

So, even though you may not yet be concerned with providing for your retirement, it's reassuring to know that the NTMA is.