Irish finance minister seeks debt reduction

13 Aug 19

Public debt in Ireland rose to €206bn in 2018 - 104% of gross national income and among the largest of OECD member countries.

When releasing the Annual Report on Public Debt 2019 last week, finance minister Paschal Donohoe said it was “crucial” to reduce debt to make the economy more resilient.

The report highlighted that last calendar year saw the first surplus in the country since 2007 - about €100m – and that the country’s economy had experienced nine consecutive years of growth.

But public debt remained high – before the crash it was less than €50bn, but it skyrocketed in the following years and has remained at about €200bn since 2011. The increase from 2017 to 2018 was €201bn to €206bn.

This meant the Irish debt reached €42,500 per capita in 2018, which the report pointed out was high by both historic and international standards.

Donohoe said: “The analysis contained in the [public debt] report 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.”

The 2018 interest bill on Ireland’s debt (more than €5bn) could have funded nearly all the year’s capital expenditure, according to the report.

It called for budget surpluses in the coming years, supported by temporary revenues (from corporation tax receipts) and windfall gains (from asset sales) to help the country reduce its debt.

Donohoe said this would make public finances more resilient amid “increased uncertainties in the external environment”.

Both the report and Donohoe stressed it was important to ensure Ireland’s economy was robust as public finances will come under increasing strain due to Ireland’s ageing population.

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