- Public debt in Ireland increased to €206 billion in 2018;
- At an estimated 104 per cent of GNI*, debt remains elevated by both historical and international standards;
- On a per capita basis, debt increased to €42,500 last year, amongst the highest in the OECD;
- Uncertainty in the external environment and less favourable demographics in the coming decades re-affirm the need for prudent fiscal policy;
- Reducing public indebtedness remains a key priority;
- Structural reforms that continue to boost domestic employment will be important to reduce the debt burden.
The Minister for Finance and Public Expenditure and Reform today (Thursday) published the Annual Report on Public Debt 2019, the aim of which is to provide a comprehensive analysis of public debt dynamics in Ireland. In addition, to highlighting the main developments in public debt over the last year, the report introduces a number of new analytical pieces focusing on broader aspects of public debt, including debt maturity levels and the composition of debt.
The report illustrates that public indebtedness, at 104 per cent of GNI*, remains elevated by both historical and international standards. The stock of debt amounted to €206 billion last year or €42,500 on a per capita basis; one of the largest in the OECD.
Analysis in the report highlights that active debt management has reduced the interest bill and extended maturity profiles. However, the annual interest bill continues to represent a significant operating cost for the State at €5.2 billion last year. Indeed, this payment is equivalent to nearly all of last year’s capital budget. Reducing the level of debt would therefore free-up these resources to be used in areas that could bring long-lasting benefits to citizens.
The analysis of recent trends in the public finances in this report is complemented with dynamic forward-looking assessments of future debt developments which highlight potential vulnerabilities. The debt path is shown to be highly sensitive to any shocks to economic growth. In addition, the report shows that without policy intervention, the sustainability of the public finances will face significant challenges from the projected ageing of the population over the coming decades.
Welcoming the report, Minister Donohoe said: ‘The analysis contained in the report published today by illustrates the importance of prudent management of the public finances. An important milestone was reached last year when a budget surplus was recorded for the first time since 2007. However, public indebtedness remains too high. It is crucial that we build on the solid progress made in recent years and run budget surpluses to prevent the build-up of additional debt. By reducing the debt burden we will minimize the exposure of the economy to the increased uncertainties in the external environment and the pressures associated with the anticipated changes in the age structure of the population. The establishment of the Rainy Day Fund this year will also help to build up the resilience of the public finances and help to prepare us for the challenges ahead’.
ENDS
Note to Editors:
- In his opening statement to the Public Accounts Committee on May 30th 2019, the Comptroller and Auditor General noted that the Department of Finance has addressed an important information gap by publishing the Annual Report on Public Debt which provides “useful information and commentary on the composition and evolution of Irish government debt, on measures of debt sustainability and on progress towards achievement of debt targets”.