Mr. Seamus Coffey:

There is no doubt that interest rates will change and are likely to increase. Most forecasts for interest rate increases are relatively moderate over the time period referred to, when this large amount of debt is due to be refinanced. The National Treasury Management Agency, NTMA, is a better place to address questions on that. It has built up significant cash reserves at the historically low interest rates to put itself in a position to deal with those redemptions as they fall due over the next couple of years. I think there is close to €20 billion available, with further debt offerings planned for this year. After 2021 there will be a bit of a gap until 2023 or 2024, before the next bonds roll around again. Even if there are interest rate increases, there is no doubt that the debt we have will be refinanced at lower rates. Some of the bonds that are due to mature this year were issued 10 years ago, when interest rates were 4% or 4.5%. Some of them were issued when interest rates were lower, but of course Ireland faced a higher borrowing cost.

I think the bonds will be rolled over at a lower interest cost than the current one, and we are likely to see continued savings on the interest on the national debt. The issue is that over a longer term this will eventually begin to edge upwards. It might be a decade or more before the €10 billion figure which was forecast comes into view, but it is a potential reality. There is no doubt that it is good to identify it as a risk but I think that the low probability estimate is correct, because it is one that will take a while to materialise. The estimation of the medium impact is also correct, because it is not going to happen very rapidly. We have seen the benefits of the low interest rate build up over a number of years, and equally the cost of higher rates of interest will take a few years to build up.