Minister Donohoe publishes Annual Report on Public Debt in Ireland 2020

28th January, 2021

  • The Covid-19 pandemic has resulted in a sharp increase in public indebtedness in Ireland.
  • Debt-to-GNI* is expected to have increased by 12 percentage points to 108 per cent in 2020, equivalent to €219 billion and €44,000 in per capita terms.
  • Factoring in the measures announced in Budget 2021, public debt is expected to increase this year to 115 per cent of GNI* and around €47,700 per person.
  • Notwithstanding the increase in public debt, the debt service burden has fallen, reflecting the decline in borrowing costs.
  • Several factors mean the level shift in public indebtedness can be absorbed, notably the relatively healthy pre-pandemic position of the public finances, low financing costs and a number of positive structural features of Irish public debt.
  • Once the pandemic has passed, it will be important to put the debt-income ratio on a downward trajectory, in order to reduce the vulnerability of both the Irish economy and the public finances to future shocks.


The Minister for Finance, Paschal Donohoe TD has today, Thursday, published the Department’s fourth annual assessment of public indebtedness, the Annual Report on Public Debt in Ireland 2020The aim of this is to provide a comprehensive analysis of public debt developments in Ireland.


As a result of the unprecedented Covid-19 shock, the fiscal landscape in Ireland – as elsewhere – is dramatically different to that of just a year ago.  The budgetary supports necessary to limit the economic fall-out from the pandemic have resulted in a large increase in the debt-income ratio.  As a share of modified Gross National Income (GNI*), public indebtedness increased by an estimated 12 percentage points last year, to 108 per cent.  This corresponds to a stock of public debt of €219 billion, the equivalent of €44,000 for every person resident in the State.  With further debt accumulation expected this year, the per capita figure is set to reach around €47,700.


Analysis outlined in this Report suggests that the public finances can absorb this level-shift in public indebtedness.  Prudent management of the public finances in recent years ensured a relatively healthy starting fiscal position: pre-pandemic, the budgetary accounts were in surplus.  Importantly, while the absolute level of indebtedness is high and rising, favourable financing conditions mean that the burden of debt is moving in the opposite direction. 


There are also several structural features of Irish public debt that remain favourable, including a relatively long maturity profile, a large share of fixed-rate debt instruments as well as strong credit ratings.


That said, the need to stabilise the debt-to-income ratio and, ultimately, to reduce it to lower and safer levels must be a key priority over the medium-term, in order to reduce the vulnerability of the economy and public finances.  Economic growth can play a large role in this, with underlying growth dynamics remaining relatively strong. 


Welcoming the Report, the Minister for Finance, Paschal Donohoe T.D., commented: “The analysis published today by my Department shows the profound impact that the Covid-19 pandemic has had on economic conditions and the public finances. 


“The Government has responded swiftly and robustly to limit the economic fall-out from the pandemic: income supports for households and firms and scaling-up of healthcare capacity have all been part of the policy toolbox.  While these measures have resulted in a substantial budget deficit and a marked increase in debt-income ratio, the costs of inaction would have been even greater.  So allowing our debt to increase is the appropriate policy response – it is the policy response adopted all across the world and the right course of action.


“The measures taken will help to steer the economy through these challenging times, and help to return the public finances to a more balanced path once the worst effects of the crisis fade.”


Note to editors:

This is the Department’s fourth annual assessment of public debt dynamics. 

The analysis set out is based on data up to mid-December 2020.

Projections based on Budget 2021 forecasts.