Professor John McHale:

Dr. Donovan wants to contribute. First, I would like to add that we have been analysing the impact of selling the current Government stakes in the banks. A conservative estimate is that they are worth approximately €13.4 billion. A more optimistic estimate puts the figure above €20 billion. A very interesting calculation the secretariat produced was on the impact of selling the stakes over a period of three to four years on the debt-to-GDP ratio. The calculation estimated the size of the gross shock that would occur next year that would leave one in the same place in 2018 as one would be left according to the current projection. In other words, I refer to a combination of selling the stakes to pay down the debt and having a gross shock next year. It is striking that, with the more conservative estimate of €13.4 billion, a gross shock next year of just 1.2 percentage points, followed by a return to the growth that is currently projected, would result in the same debt-to-GDP ratio in 2018, which is 95% of GDP. The point of that sort of calculation is that it does not make a huge difference to the time path of the debt-to-GDP ratio and could be offset by a relatively small shock. Even if one used a more optimistic estimate of the value of the bank stakes, which is approximately €21 billion, one would conclude that a gross shock of 1.9 percentage points would leave one with the same debt-to-GDP ratio in 2018 as the one currently projected. In other words, it would fully offset the advantage of selling the stakes. Selling the stakes to pay down debt does help the debt-to-GDP ratio but, at the same time, the effect is somewhat limited.