National debt rose in 2007

THE national debt increased in 2007 as the Exchequer sank into a €1.6-billion deficit.

With tax revenues running well behind forecast in 2007 thanks to a slowing property market, the Government has been forced to increase its borrowing for the first time in a number of years.

New figures from the National Treasury Management Agency show the national debt increased to €37.6bn in 2007 from €35.9bn.

However, Ireland’s national debt remains one of the lowest among the 27 members of the EU with only seven countries having a lower debt/gross domestic product ratio.

The general government debt/GDP ratio (the EU’s preferred measurement of debt, which includes local authority debt but excludes the Government’s cash reserves) is expected to rise again in the next few years given the deficits forecast by the Department of Finance for 2009 and 2008. The NTMA said the extra borrowing, expected to be €4.8bn in 2008, will push the general government debt/GDP ratio from 25.1% to an average of 27% between 2008 and 2010.

The interest payments on the national debt decreased again in 2007. The NTMA said the debt cost €1.61bn to service in 2007, down from €1.85bn in 2006.

According to the NTMA, the interest payments on the national debt account for 3.4% of tax revenues compared with 23.6% in 1991 when the agency was set up.

NTMA chief executive Dr Michael Somers said the debt could be paid off in full with three months’ tax revenues and the funds held by the NTMA.

Dr Somers said very little of the debt was due to mature in 2008 so no decision had been taken on whether to sell further bonds into the market.