Marc Coleman: Rescheduling our debt won't help – we need a write-down
We must restore confidence so that consumers start spending again
A small fraction of a fraction of a fraction. When finally totted up and set against the massive total of government indebtedness, that last sentence will probably be a fair description of the net effect of any deal agreed between the government and the troika on Ireland's bank debt.
In Davos last week George Soros used more pejorative terminology to describe how that deal was shaping up: "A raw deal for Ireland." But let's not pre-judge the Government's efforts to date. Instead, let's hope for the best. But let's also stand back and see where we stand in relation to our national indebtedness, our exposure to the banks and our exposure to other contingent liabilities. When that is done, it will be clear that a rescheduling of Ireland's debt – as distinct from a write-down – is unlikely to make any material difference to Ireland's debt burden. Nor to the economy's capacity to grow in the future.
At €169.2bn last year, our national debt is equal to 118 per cent of GDP and on the verge of going over the critical 120 per cent barrier. This debt amounts to a burden of €36,943 on every man, woman and child in the country, and €91,892 on each worker in the economy. A crucial component is the promissory note, worth €31bn, of which about €28bn counts as national debt to be repaid in 10 tranches of €3.1bn between now and 2023.