National debt ‘set to hit €173bn’

IRELAND’S national debt is set to hit €173bn by the end of the year, an average of €81,519 for every worker in the State, according to Bank of Ireland chief economist Dan McLaughlin.

Yesterday, the bank’s economic research unit published its monthly analysis of international and Irish markets.

In it Mr McLaughlin said that Ireland’s gross national debt stood at €110bn at the end of 2010, with €90bn in the form of government bonds.

“The net figure, which takes off cash balances, was €93bn, and it is this figure, further adjusted for liquid assets held by the National Pension Fund, which the IMF monitors as part of the current Irish programme.

“The EU prefers a broader definition of sovereign debt, however, called general government debt, and on that measure the Irish figure amounted to €148bn or 96% of GDP, with the difference largely due to the €31bn promissory notes for the state-owned banks,” he said.

Mr McLaughlin points out the Department of Finance expected the debt ratio to rise to 99% this year and to peak at 103% in 2013, but now forecasts 111%, rising to a peak of 118%.

“In cash terms, the debt total is forecast to end the year at €173bn, or €25bn higher than 2010, reflecting the Budget deficit and some €10bn to cover the costs of additional bank recapitalisations,” he said.

This represents €38,696 owed by every person living in the State.

Mr McLaughlin said that Ireland’s debt ratio on the EU definition is now above the Eurozone norm of 85% but not dramatically so, as most countries have seen a substantial increase in debt.

“Germany’s ratio has risen from 65% to 83% in the past four years,” he points out.

Mr McLaughlin said recent developments mean that the debt burden may now peak at a higher level than previously projected and that the interest rate on the debt is also expected to be higher than initially projected.

“The level of GDP over the next few years is now expected to be lower than previously thought, and forecasts for real economic growth have also been revised down for this year and next.

“The department has halved its 2011 growth forecast to 0.8% (and as such now similar to our own 0.5%) and expects 2.5% next year, from an original 3.2%.

“The net result is that the general government deficit this year is now expected to be higher than projected last December, at 10% of GDP, instead of 9.4%, with the 2012 deficit also revised up, to 8.6% from 7.3%,” he said.


More in this Section

More public investment needed for Cork to thrive

Too early to tell whether prices and wages will rise

Little room for hot air in energy debate

No secret to games success for 9th Impact


Breaking Stories

World Bank to end financing of oil and gas projects in 2019

Former Facebook exec says he feels ’tremendous guilt’ over creation of site

Facebook to pay taxes in country where advertising profits are earned instead of via Dublin HQ

Further talks to be held as thousands of Bombardier jobs hang in balance

Lifestyle

Meghan Markle’s sparkle sets the stage for must-have fashion items

Not buying Irish at Christmas costs us dearly

GameTech: B-listers offer plenty of gameplay

Judi Dench branching out into her other passion

More From The Irish Examiner