News Politics

Monday 16 September 2019

Chances of Ireland being hit by another recession are '100pc', NTMA boss warns

National Treasury Management Agency (NTMA) chief executive Conor O'Kelly. Photo: Frank McGrath
National Treasury Management Agency (NTMA) chief executive Conor O'Kelly. Photo: Frank McGrath
NTMA chief Conor O’Kelly. Photo: Chris Bellew /Fennell Photography
Cormac McQuinn

Cormac McQuinn

THE chances of Ireland being hit by another recession are "100pc" the boss of the National Treasury Management Agency (NTMA) has warned.

Chief Executive Conor O'Kelly told the Dáil's public spending watchdog that "we're in the permanent contingency business in Ireland" given the more  than €200bn scale of the national debt.

He also said "that's what we believe is the most prudent thing to do."

Mr O'Kelly cited the Brexit, issues with the Italian economy and international tax changes among risks but also said it could also be something "more than likely that we can’t even think of today that’ll end up hitting".

He is this morning appearing before the Dáil's Public Accounts Committee (PAC) to discuss the NTMA's financial statements from 2018.

Sinn Féin TD David Cullinane asked what Ireland's risks were in terms of debt and what was being done to protect the State from Brexit,.

Mr O'Kelly said: "I don’t mean to say this glibly but I suppose whether Brexit, Italy , corporate tax or some other challenge that we have Ireland is a small, open economy, highly indebted, relies on international investors for 90pc of its borrowings.

"We’re in the permanent contingency business in Ireland with the debt that we have.

"People talk about whether the bond market is predicting recession or who’s predicting a recession.

"I’ll give you a prediction of recession. The chance of a recession in Ireland is 100pc.

"So we can’t afford not to have a contingency in place."

Mr O'Kelly added: "We have to remain vigilant to that and we do that by having significant cash buffers at all times, smoothing out the profile of the debt to make sure we minimise the refinancing risks in the future."

He said the NTMA oversees the State’s ‘rainy day fund’ and €1.5bn will be allocated to it with the legislation that’s currently being passed.

Mr Cullinane asked what the other buffers are and Mr O'Kelly replied: "The cash that we hold.

"Currently we hold €20bn but obviously for the maturities that are coming up we have significantly more cash than we would normally...

"We would normally be estimating you would have €10bnish in cash...

"We don’t like to talk in these terms any more but in the old days people used to talk during the crisis about... do you have a year’s funding or 18 months or nine months.

"These days our access to markets is not an issue.

"It’s just a question of the price of that access. We don’t anticipate Ireland having a difficulty accessing the market.

"What we do worry about is what’s the price, what’s the cost?"

Fine Gael TD Kate O'Connell asked if Mr O'Kelly's reference to a 100pc chance of a recession "at this point in time or is it October 31 stuff?" - a reference to the deadline for Brexit.

She asked if it could be assumed that if there is a hard Brexit "we really are in an extremely precarious position as a country".

Mr O'Kelly replied: "No, I was just making a general point in terms of the long-term… that at some point."

Ms O'Connell said: "If we are in this precarious position – which we are clearly carrying that mountain of debt – and there is a hard Brexit, we really could be in the depths of a recession worse than we were in ten years ago? Would that be true to say?... that we need to brace ourselves?"

Mr O'Kelly said: "We have to be vigilant and we have to be ready. Our debt makes us more vulnerable than we would have been."

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