Business Irish

Thursday 17 October 2019

Taxpayers unlikely to recover all the money used to bailout AIB, new report warns

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David Chance

Taxpayers are unlikely to recover all of the money they put up to bail out AIB thanks to the hefty debt service costs associated with the investment.

The Comptroller and Auditor General annual report for 2018 said that projected outcomes that the State would get its money back had failed to account for the cost of servicing the debt associated with the rescue package.

“It is unlikely that the State will generate a surplus on its investment of €22.2bn in AIB,” the report said.

It said the cost of the bailout for AIB was an estimated €9.5bn, after taking account of the €7.1bn value of the State’s remaining shareholding in AIB and said that the costs of servicing the debt had so far amounted to €6.2bn.

Overall, the rescue package for AIB, Bank of Ireland, Permanent TSB and IBRC had cost taxpayers a net €41.7bn by the end of 2018.

IBRC alone, from which the State does not expect to make any more meaningful recoveries, had a net cost of €36.4bn.

The State is still incurring debt service costs for the rescue package, a move that pushed Ireland close to bankruptcy, and those debt-related costs totalled €22bn by the end of last year, according to the report.

For this year alone, the estimated debt costs of the bailout, which was a controversial measure at the time, are estimated at €1.6bn which is more than the €1.4bn in extra funding found in this year’s budget for capital expenditure to repair the State’s ailing infrastructure.

By comparison, the State’s overall debt service costs last year were €5.2bn.

The assumption of the bank’s liabilities by the State is the main reason why debt here is north of €200bn and among the highest levels in the world on a per capita basis.

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