Irish debt up 4.4pc as tax receipts below forecast
Dr Michael Somers, NTMA chief executive, said the annual interest bill is now 3.4pc of tax revenue, compared to nearly 24pc when the treasury management agency started Merrion defers out in 1990
IRELAND'S national debt will rise by 4.4pc in 2007 to €37.6bn, according to the National Treasury Management Agency.
The increase is in line with €1.6bn exchequer deficit predicted by the Department of Finance at the start of December as tax receipts continued to come in significantly behind original expectations. This mainly reflected a sharp fall-off in stamp-duty receipts as the housing market deteriorated during the course of the year.
The preliminary NTMA results for the year show, however, that the country's national debt is now the equivalent of just three month's tax revenue -- down from four months at the end of 2006.
The exchequer's interest payments on the debt for 2007 were €1.6bn, down from €1.8bn for last year. "The annual interest bill is now 3.4pc of tax revenue, compared to nearly 24pc when the NTMA started out in 1990," said Dr Michael Somers, the agency's chief executive.
National debt as a ratio to gross national product (GNP) fell from 24.1pc at the end of 2006 to 23.6pc at the end of 2007. General government debt to gross domestic product (GDP), a preferred EU measure, was unchanged at 24.1pc.
Mr Somers noted that the latter ratio does not account for the €4bn of cash the NTMA currently has in hand.
In October, the NTMA issued a new €6bn bond to refinance the Republic's maturing debt. It will have to raise a further €4.8bn to cover a budgeted exchequer deficit in 2008, plus €100m for maturing bonds.
Mr Somers said the NTMA will have to raise about €11bn in 2009 as €5bn of treasury bonds mature and the exchequer deficit rises to between €5.8bn and €5.9bn. Ireland continues to have an AAA, or triple-A, top long-term credit rating among international credit agencies.
The NTMA also manages the National Pension Reserve Fund (NPRF), which is designed to meet social welfare and public service costs from 2025 onwards.
The NPRF grew by €2.4bn to €21.3bn from the start of the year to December 26, reflecting a €797m, or 4.1pc, increase in investment returns and a €1.6bn contribution from the exchequer.
The most recent comparable figures show that the NPRF was up 4.3pc in the 11 months to the end of November, whereas the average Irish pension fund was down 2.7pc.
Irish equities, which have fallen 26pc this year, account for less than 1pc of the fund, according to John Corrigan, head of the NPRF. The average Irish pension funds have about 16pc exposure to the domestic market, according to pension consultants Mercer.
The NTMA's also manages personal injury, property damage and clinical negligence claims brought against certain State authorities and health enterprises through its State Claims Agency (SCA) unit.
The SCA is currently managing about 3,970 claims, of which around 1,500 relate to clinical negligence claims against health enterprises. It has a total reserve of €438m set aside to cover potential liabilities.
The NTMA's fourth arm, the National Development Finance Agency (NDFA), advises State authorities undertaking major infrastructural projects. A total of 117 projects have been referred to the NDFA since it was set up in 2003. It has completed its advice in relation to 38 projects with a combined capital value of €6bn. Some 21 of these were public private partnerships (PPPs).
- Joe Brennan
