Average State interest rate falls to record low of 1.5%

Ireland is benefitting from ongoing support from the European Central Bank.

The average interest rate on Ireland’s debt will fall to a record low of 1.5pc this year as the interest bill drops below €3.5bn.

The State's debt office the National Treasury Management Agency (NTMA​) published its mid-year business update today and said interest repayments are expected to remain below €4bn per year until 2025 at the earliest. This is despite a surge in borrowings to finance the response and range of supports since the onset of the Covid-19 pandemic.

The country’s total stock of debt is set to rise from €200bn at the end of 2019 to over €250bn by the time the country has paid for the full impact of the pandemic in the coming years.

According to the report, Ireland’s borrowing position in the face of the massive supports needed to weather Covid-19 remains strong. It is benefitting from ongoing European Central Bank (ECB) support, the strategy of locking in low-interest rates for long terms, and the return to fiscal surplus pre-pandemic.

"The extent of refinancing risk we face post-2025 may be overstated," NTMA Chief Executive Conor O'Kelly said. "As we have one of the longest average maturities in Europe and our issuance strategy over the past number of years will give us significant protection in a potentially changing interest rate environment."