Conversion of AIB preference shares pushes up deficit to 2.3pc
Published 21/04/2016 | 02:30
Ireland recorded a headline deficit of 2.3pc last year - higher than expected because Europe classified as government spending the conversion of AIB's preference shares to ordinary shares during the latter's capital reorganisation.
When this was stripped out, the underlying deficit was 1.3pc, the Department of Finance said.
The state's debt to GDP fell to 93.8pc of the value of the economy at the end of last year - lower than forecast in October's Budget.
In monetary terms, that was the equivalent of €201.3bn, down from €203.3bn at the end of 2014.
The Central Statistics Office said this was due primarily to a significant increase in GDP, which rose from €189bn in 2014 to €214.6bn last year.
Finance Minister Michael Noonan said the data demonstrates strongly the improvement in Ireland's public finances.
"Indeed, the strength of the performance is such that impact of the treatment of the AIB preference share transaction by Eurostat leaves the headline deficit at 2.3pc. This is still well within the EDP (Excessive Deficit Procedure ) limit of 2.9pc that Ireland had to achieve last year.
"The one-off nature of the transaction affecting the 2015 figures has no further implications and my Department is forecasting a deficit of 1.1pc of GDP for 2016."
Meanwhile, trade credit insurance group Euler Hermes has forecast that the Irish economy will grow at almost double the rate of the rest of the world for the next two years, and will remain the fastest growing country in the Eurozone despite fears about a possible British withdrawal from the European Union.
Euler Hermes projected that in contrast to global GDP growth, which will only register a 2.5pc rise in 2016, before picking up slightly to 2.8pc next year, Ireland's economy will grow by around 5pc this year and 4pc in 2017. Ana Boata, European economist at Euler Hermes, said that more than 70pc of the world economy will slow down or be in recession in 2016.
"China, the US, the UK, Saudi Arabia and Turkey will register lacklustre growth rates. Argentina," Ms Boata said.