NATIONAL Treasury Management Agency chief executive Conor O’Kelly was refreshingly candid when he appeared before the Dáil’s Public Accounts Committee yesterday.
He told the committee that while the NTMA had completed the early repayment of just over €18bn of Ireland’s IMF loan facility using cheaper market funding, generating savings of €1.5bn over the original lifetime of the loan, we remain indebted to the tune of more than €200bn.
However, the most revealing comment he made was the extent to which the nation’s finances have improved over the past three years. He said that in 2013 Ireland had difficulty borrowing for 100 days but now we borrow for 100 years.
The must put the so-called Leprechaun economics comment in relation to our rise in GDP into perspective. That was the lazy, damaging, and offensive — indeed racist — phrase employed by the Nobel Prize-winning economist and New York Times columnist Paul Krugman in response to CSO figures showing an extraordinary GDP growth of 26%.
While the CSO faced ridicule for reporting the 26% growth rate in Irish GDP for 2015, up from an initial estimate of 7.8%, it was simply applying the standard for national accounting within the EU. This is the framework of rules set down by Eurostat, the union’s statistics agency. These rules are used by national statistics offices in all EU states, but they do not suit Ireland’s open economy and are clearly not fit for purpose.
Indeed, this Eurostat standard of accounting is also being used to assess Ireland’s contribution to the EU and means that the State now has a €280m obligation on the back of a report which bore no relation to Ireland’s real economic growth.
While our economic recovery has not been as dramatic as the GDP figure suggests, the fact that we are able to borrow on international markets almost without limit when three years ago Irish government bonds were junk status shows that we have come a long way since the recession.
Much of the credit for that must go to the Fine Gael/Labour coalition government, in particular Taoiseach Enda Kenny’s stewardship and Finance Minister Michael Noonan’s handling of the economy.
The contribution made by the Labour Party to our economic recovery should not be forgotten even though it cost the party dearly.
Such is the unpredictable nature of politics that doing the right thing is not always profitable for politicians. In the general election, Labour was severely punished by the electorate as it experienced its worst drubbing for decades.
“While there has been considerable discussion of Ireland’s GDP data in recent days, there is a very clear trend that Ireland’s debt as a percentage of GDP is continuing to fall,” Mr O’Kelly told the Public Accounts Committee yesterday.
That is good news for the country as a whole. Even a Nobel Prize-winning economist should understand that.
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