Madam, – Minister for Finance Brian Lenihan’s dire predictions concerning the national debt reaching €160 billion in 2013 and interest payments consuming two-thirds of income tax (Home News, October 16th) may appear to some to be extreme.
However, they are grossly underestimating the problem. He excludes the €54 billion for Nama which the Government claims will be “off balance sheet” which is the national equivalent of shoving your credit card statement under the mattress and saying “well that’s that sorted out”. Including this figure pushes the national debt to €210 billion. We could add to this the further recapitalisations which almost everyone knows the banks will need – but we won’t.
Nonetheless, Mr Lenihan makes one more significant mistake in that he is excluding any capital repayments on this €210 billion national debt. Like any loan, capital will have to be paid down as our national bonds mature. Assuming we stretch out the capital repayment figure over 20 years, to 2033, then this adds another €10 billion in annual capital repayments on top of the €10 billion interest, assuming a 5 per cent rate This brings into stark focus the depths of national crisis facing Ireland.
The entire central government income is currently approximately €30 to €32 billion with spending of approximately €55 billion. Thus by 2013 spending will not only have to contract by more than €20 billion just to stop borrowing, but then it will have to contract by another €20 billion just to start paying off the national debt – which would leave only €10 billion for public spending.
In more understandable numbers and assuming one million families in Ireland, then each will have pay €20,000 per year in taxes just to pay off the national debt by 2013, and that is before a single cent is available for public services. – Yours, etc,