Scope raises Irish credit rating to AA over 'robust economic growth'

Finance Minister Jack Chambers, right, said the positive ratings 'reflect this Government's commitment to a sustainable approach to budgetary policy'. Picture: Stephen Collins/Collins Photos

The Scope ratings agency has upgraded Ireland's long-term credit ratings to AA on what it said was the country's strong public finances and robust economic growth. 

However, it warned that Ireland's high reliance on multinational corporations and exposure to global shocks as a small, open, and financially interconnected economy remains challenging.

It is a recent outlook report, Scope upgraded the country's rating to AA from AA-. 

Scope said it expects the Government's budget balance to remain in surplus over the coming years, reflecting continued sizable windfall corporate income tax receipts, which have increased sharply since the pandemic — more than doubling from €10.9bn in 2019 to €23.8bn last year — and now account for 27% of Government revenues. 

Corporate tax revenues are up again this year by 15%, compared to the first half of 2023.

"Further strengthening Ireland’s fiscal position, the Government has set up two new long-term savings funds in 2024 to ringfence excess corporate tax revenues, estimated to be more than €10bn per year over coming years," Scopes said.

At least 0.8% of GDP, around €4-6bn, will be transferred to the Future Ireland Fund (FIF) every year until 2035

"The Government estimates that the fund could grow to around €100bn, allowing future governments to draw down the fund’s investment returns from 2041 onwards to contribute to future spending pressures from an ageing population, the digital and climate transitions, without depleting the original capital."

Economic resilience

Ireland’s modified domestic demand growth is also set to remain robust over the coming years, growing by 2.1% in 2024 and 2.5% in 2025.

Responding to the report, Finance Minister Jack Chambers said it was another strong indicator of the strength and resilience of the economy. 

"These positive ratings reflect this Government’s commitment to a sustainable approach to budgetary policy while continuing to invest in our public services and providing support to households," he said.

Earlier this month, ratings agency Moody's upgraded Ireland’s outlook to positive from stable and affirmed its Aa3 rating.