Within four years, 20pc of all tax will go on interest bill
TAXPAYERS will have to pay €5bn this year to service the national debt -- which is set to rise to €112bn next year.
Almost all of this sum (€4.4bn) will go to pay interest on the debt, with the remainder for other debt servicing costs.
Within four years, one euro in every five raised in tax (20pc of the total) will go towards paying interest on our national debt -- compared with 14pc of tax revenues at present.
But that does not even include the cost of the National Asset Management Agency (NAMA) -- which is being kept off the State's balance sheet.
It comes as new figures showed Ireland officially recorded the biggest government deficit in the EU last year.
At the Public Accounts committee the huge rise in the national debt was described as "extraordinary" by TDs.
It was just €35.9bn in 2006, but has since increased to €37.6bn in 2007, €50bn in 2008, €76bn in 2009, €94bn this year and €112bn next year. The interest bill on this has also skyrocketed -- from €1.5bn in 2008 to €4.4bn this year and €5.7bn next year. Next year's bill will exceed the €3bn the Government plans to impose in spending cuts in the next budget.
The National Treasury Management Agency (NTMA), which borrows money on behalf of the State, said the main reason for the rise was the need to borrow for day to day spending.
However, the national debt has risen by another €4bn due to the funds put in by the State into Anglo Irish Bank -- and will rise further as the nationalised bank requires at least €18bn in in the years ahead.
Taoiseach Brian Cowen had previously denied the €4bn pumped into Anglo last year would be counted as part of the national debt -- yet the EU's Eurostat agency ruled yesterday that it had to be.Fine Gael TD Padraic McCormack said the figures on the State's spiralling national debt were startling. "Would you say borrowing has gone out of control?" he asked.
NTMA chief executive John Corrigan said that was a matter for Finance Minister Brian Lenihan. But he said the difference between the cost of borrowing (known as the spread) which had been 2.8pc over the German rate last year had now dropped to 1.58pc -- which meant the State saved around €340m in interest payments last year.
"There's been a dramatic improvement in the spread," he said.