YESTERDAY’S warning from the State’s debt agency the National Treasury Management Agency (NTMA) was a sobering reality check.
The agency’s CEO Conor O’Kelly, pointed out that high debt and interest bills compared to Government revenues may become an even greater burden as investors try to decide when the European Central Bank will bring the eurozone’s loose monetary policy to an end. Higher interest rates, and higher bills, may become a reality in the not too distant future.
We are in an invidious and vulnerable position. Government debt, at more than €200bn, is 275% of revenue whereas the EU average stands at 165%. Its annual interest bill is running at 8% of revenue, twice the EU average. These figures stand despite cutting debt relative to gross domestic product (GDP) to 75% from 123% in the past four years.
The warning is prudent but it is even more important that we remember why we got into this awful position in the first place so we do not repeat the calamitous mistakes.
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