Ageing population could affect net debt

AS the Irish population ages, the implications for the national debt and our international credit rating could be serious, a report warned yesterday.

Prepared by international credit service Standard & Poors, the report warns that even by 2010, the move towards an ageing population could be reflected in rising government deficits and with net debt, presently one of the lowest in the EU, starting to accelerate.

In its assessment, S&P warned: “Without concerted policy and fiscal reforms, the aging Irish population will lead to intense pressure on the public finances and the ratings of the country.”

The report, titled Global Graying Country Report: Republic of Ireland, is part of a bigger undertaking carried out by the credit ratings group covering 32 countries.

Without internal reforms to cope with the ageing factor, the report says “total age-related public expenditures in Ireland will rise to 20.9% of GDP in 2050, up from 11.2% in 2005”.

In that situation, credit analyst Trevor Cullinan of S&P warned, “general Government deficits and net debt will begin to accelerate quite sharply even by 2010, accelerating thereafter, and remaining buoyant until the middle of the century, as larger cohorts enter retirement age”.

Such a significant deterioration in the national finances would result in the loss of the country’s AAA credit rating, he said.

If the situation went unchecked, our AAA credit rating would be seriously undermined.

A recent NCB Stockbrokers report highlighted that over-65s will account for 29% of the population by 2050 or 1.7 million people. That compares with slightly over 11% at present.