Covid borrowing raises Ireland's national debt to one of world's largest at €47k per person

Finance Minister Paschal Donohoe said that "major fiscal challenges lie ahead", including a likely fall in corporation tax receipts, an ageing population, and the need to finance the transition. Photo: Gareth Chaney/ Collins Photos

Pandemic borrowing pushed Ireland's national debt to nearly €237bn, up by €33bn.

This is an estimated 106% of national income, or €47,250 for every person in the country, new figures released by the Department of Finance show. That per person figure is one of the largest in the world, the Department said. 

However, the fifth annual report on the national debt also shows that the cost of servicing this debt has fallen as interest rate costs have declined.

Finance Minister Paschal Donohoe said that "major fiscal challenges lie ahead", including a likely fall in corporation tax receipts, an ageing population, and the need to finance the transition. He said that the report underscores the level of borrowing which was needed to fund pandemic supports such as the PUP and EWSS schemes.

“The analysis published by Department today highlights the significant impact of the pandemic on the public finances.

“The Government responded swiftly and forcefully to minimise the economic fall-out from the pandemic and this was the appropriate strategy. The economic supports that we put in place saved jobs, supported households and kept businesses afloat the length and breadth of our country."

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Mr Donohoe said that since restrictions were wound down, the economy "is bouncing back strongly" but said that it must be a priority to stop adding to the public debt.

“From a policy perspective, that is what I intend to do," he said.

"The reason why we are indicating that the spending decisions of the last couple of years have to come to an end is that I am very conscious about what this future debt will mean to future generations. And I am conscious that this debt here will impact on decisions that they will make. 

"But this is why it's so important now that we stop debt increasing and we move to the point, which we will move to, that our debt as a share of income begins to fall across the coming years."

Mr Donohoe said that Ireland "has some bridges to cross" before thinking about retiring debt and said that such a decision would be affected by decisions made around the pension age.

"For now, all of my focus is on how we can secure a place in which we stopped our debt increasing. And yes, the decision that the government is yet to make in relation to how we fund future pensions will affect that."