NTMA and ECB buy us some time on national debt. Let’s use it wisely

But thanks to those very clever people at the NTMA, we seem to be in a much better position than if we had simply gone mad on cheap borrowed money in recent years.

Since 2020, the State has issued a staggering €47bn on the bond market, much of it needed to get us through the Covid crisis. But the good news is that it was raised at a weighted maturity date of 12.6 years and at an average rate of (wait for it) only 0.22pc.

This is just as well, given that our 10-year bond yields last week were running at 2.5pc. This isn’t an unmanageable figure, but events of recent weeks show how quickly things can turn.

Between expected future borrowings and re-financing debts that fall due, the NTMA expects to raise about another €35bn between this year and 2025. It is still a lot of cash – but less than the €47bn of recent years.

Another piece of reassuring news is that the average payback time on our debt is 10.9 years, which is the second longest in the eurozone after Austria (at 11.2 years).

In Italy, the equivalent figure is seven years, and the debt is 150pc of GDP – or around €2.6trn.

Despite some good news about how the NTMA has navigated debt movement in recent years, we have also seen the European financial system – mainly through the ECB – buying a lot of Irish debt, which has helped to keep the cost of borrowing down.

The euro system now holds almost 30pc of our national debt. As it seeks to pull back from bond buying, there is an inevitable knock-on effect on borrowing costs.

It looks like 2016 to 2019 really was an economic sweet spot for the Exchequer, with burgeoning corporation tax receipts thrown in.

Interventions by the ECB in recent years have bought us some breathing space before we must face up to the longer term costs of legacy national debt. Hopefully we can use it wisely.

Airport take-off is still weighed down

There were encouraging figures last week on the return of passengers going through Irish airports in the first three months of the year.

Well, they were encouraging for the airports – which had faced a financial storm in the last two years.

The CSO said that first quarter passenger numbers going through Dublin Airport amounted to four million. Cork had 288,000 and Shannon had 180,463.

Comparisons with last year are pretty meaningless as 2020 and 2021 were such write-offs. A better benchmark is 2019.

By and large, all the Irish airports were at around 60pc to 64pc of 2019 levels in the first quarter. Bearing in mind that January of this year was a big Covid month and the return is building, it is hard to extrapolate a full-year figure at this stage.

However, the DAA has said that it expects 2022 passenger numbers to be 70pc of 2019 this year as a whole. Not bad, but it still leaves Irish airports in financial stress.

The DAA said last month that it missed out on 66 million passengers, €900m in revenues, and €500m in earnings between 2020 and 2022. It added that its net debt had doubled to a record high of over €1bn.

Turnover in 2019 was €934m, with €668m of that generated in Ireland. If it delivered 70pc of that this year it would amount to €653m – nearly €300m less than in 2019.

The airport authority submitted an application for higher passenger fees, which have been running at €8.11 per passenger. The DAA wants that to rise to €14.58 by 2026. If granted, this increase would have to be absorbed by airlines – or else flying is going to get more expensive for everyone.

Shannon Airport revenues in 2019 were €79m. Taking 70pc passenger numbers as a rough guide, revenues this year would be about €24m less.

Airports have a rough ride ahead.

Finding answers to Mica mess will be costly

The latest estimated costs of the Mica redress scheme put the figure at a potential €3.6bn as three more counties were added. This is a huge sum. But then again it is a huge problem for so many families.

The more surprising thing about the finalisation of the scheme is the apparent lack of interest in holding any kind of inquiry into how this all happened.

It must be unique to have some kind of regulatory cock-up or legislative gap that results in a €3.6bn taxpayer bill – and the government does not want to find out how it happened and who is to blame.

Perhaps it is simply a system failure. But given the  amount of money involved, we should be able to see exactly where the system failed.

Part of the problem is that previous inquiries – from the Beef Tribunal to Flood Tribunal to the latest Siteserv investigation – are perceived as delivering little for a lot of money.

This should not mean we give up on the investigatory process. We are told the solution to Mica is proper regulation. But if it isn’t spelled out where the problems were last time, it’s very difficult to have confidence in a new system working either.