Wednesday 7 December 2016

We will cut national debt to normal levels, says Noonan

Peter Flanagan and John Downing

Published 24/07/2015 | 02:30

Finance Minister Michael Noonan at the publication of the NTMA Annual Report. Photo: Frank McGrath
Finance Minister Michael Noonan at the publication of the NTMA Annual Report. Photo: Frank McGrath

Finance Minister Michael Noonan says good progress will be made on reducing Ireland's long-term debt this year.

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Signalling ambitious targets on cutting the so-called debt-to-output ratio, the Finance Minister also insisted that decisions on selling off taxpayer-owned shares in the banks will not be linked to the general election campaign.

He said any move on selling a chunk of the entirely state-owned AIB was not likely until mid-2016 and after the election.

Mr Noonan said the aim of next October's Budget is to cut long-term debt to 100pc of GDP or less by next year.

The debt ratio peaked at 123pc of GDP after the economic crash but was cut to 110pc by the end of 2014.

"At the end of this year it will be at 105pc. In the Budget in October I'm going to be budgeting to bring it to 100pc or to break through 100," Mr Noonan told reporters.

The minister said Ireland was approaching the eurozone average of 95pc debt-GDP and this would not have been predicted two years ago. He also said events in Greece had not really affected Ireland.

"We're no longer rated with the Mediterranean countries which were involved in programmes. We're seen increasingly as an economy more like the small northern countries in Europe," Mr Noonan said.

Turning to the Government decisions on its stakes in the banks ahead of the general election, Mr Noonan was asked if there would be a share sale of AIB before polling day. Mr Noonan explained an AIB share sale - or IPO - was unlikely this year.

"They [AIB] have their half year report out in August. In terms of the IPO there's only one window now, if you take that in September we will be preoccupied with the Budget," the minister said.

"So the only window for an IPO left is November and I have said the IPO will not be influenced in any way by the political calendar so while there is a window there, the likelihood is the IPO will go into 2016."

The EU single currency rules on debt say that it must be below 60pc, and this is Ireland's target.

The National Treasury Management Agency (NTMA), which manages Irish debt, had replaced €18bn of International Monetary Fund borrowings with loans at lower rates, saving taxpayers €1.5bn.

Conor O'Kelly, CEO of the NTMA, said the Greek crisis had not badly impacted on Ireland despite market volatility.

Irish Independent

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