Dr. Martina Lawless:

The Deputy began by mentioning the ten year anniversary of the start of the financial crisis. I would emphasise that Ireland went into the financial crisis with incredibly low levels of debt, internationally speaking. We went into the financial crisis with levels of debt of around 25%. The strength of the impact of the financial crisis and the speed with which the turnaround in the economy occurred emphasises why many of the fiscal rules were introduced later and why these targets were brought in to try to pin down tax and spending to a long-term sustainable basis, and why the debt-to-GDP ratio is still something on which the fiscal council puts quite a bit of focus. The economy and tax revenues are now on a good path.

The debt-to-GDP ratio is trending downwards at a very impressive level but it is still is quite high historically. One element to which we drew a lot of attention is that the upward revision to Ireland's GDP numbers that happened in 2015 automatically gave a big reduction in our debt-to-GDP ratio. If we regard those GDP numbers as not really the correct measure of what is happening in the Irish economy or of Ireland's ability to pay back debt, then that debt-to-GDP ratio is also something we should treat with a bit of concern. That is why, in the pre-budget report and in the earlier fiscal assessment report, we looked at the Irish debt burden and compared it with various other indicators of the size of the Irish economy. To put in perspective the change in the Government target from a 60% debt-to-GDP ratio down to a 45% debt-to-GDP ratio, if we used GNI*, we would get back up to the 60% target almost automatically.