Public debt equal to €42k per head of population
Ireland has one of the highest levels of public debt in the developed world and is surpassed on a per capita basis globally only by Japan and the US. It amounts to €42,000 for every person resident in the State.
The Department of Finance’s second annual ‘Report on Public Debt in Ireland’ outlines how a decade after the financial crash, “the public debt overhang in Ireland remains significant” at just over €200bn.
More than half the total debt is in fixed-rate treasury bonds, while another €45m is attributed to borrowing under the EU/IMF programme. Non-residents held 56% of the total Irish public debt at the end of last year.
In what could be viewed as a warning against a budget splurge, it states: “Continuing to run deficits while simultaneously carrying a large debt stock increases the vulnerability of the public finances to an economic shock. Moreover, in an increasingly unpredictable external environment there is no room for complacency.”
It says that continued fiscal sustainability “must remain a priority, especially in view of unfavourable demographics in the coming decades”.
The report calls for a “fiscal buffer so that the automatic stabilisers can provide counter-cyclical support to the economy in the event of a shock”.
Finance Minister Paschal Donohoe said: “At over €200bn at the end of last year, it is crucial that we continue to stabilise the level of debt in Ireland and, subsequently, put it on a downward trajectory — this has been and will continue to be a key priority for Government. By reducing the burden of debt we will minimise the exposure of, and risks to, the economy.”
He said the Government’s budgetary approach is anchored in “steady, incremental improvements in public services underpinned by sustainable revenue streams”.
“We will achieve the medium-term goal of a balanced budget next year,” said Mr Donohoe.
This, as well as the establishment of a rainy day fund, will help to build up the resilience of the economy and prepare us for the challenges ahead.
One problem will be the “greying” of the population, which the report says “will have adverse implications for the public finances”.
The report concludes that it is essential to prevent build-up of additional national debt and that any windfall receipts must be used for debt reduction, including those from disposal of the country’s banking assets.
