Mr. Gabriel Makhlouf:

I will start by building on what Mr. O'Connor said. When investors look at Ireland, or any country, they think about what the fiscal position is right now, what we are doing right now, but also what we plan to do. The credibility of a forward-looking plan is quite an important factor in investors' judgment as to what they do immediately. The second and a very related thing is that the investors look not only at the State's fiscal position but also what is happening to the fundamentals of the economy and to growth and what our prospects are for growing the economy. Both those things are very important factors that play into the decisions of investors. As I wrote in my statement, and I also wrote to the Minister about this, there is a need for a credible plan to make sure the debt starts to adjust to a more sustainable position. It is sustainable right now and, as in every other country in the world, the current spending, and as a result the necessary borrowing, by Government is absolutely warranted and necessary. How long that can go on for depends very much on how long we think the virus will continue. That is a very big question underlying the need for us to base our projections on scenarios as opposed to forecasts. In both the baseline scenario and even the severe scenario we published on Friday, debt is sustainable. The big question is that we are taking on greater risk in the medium term in responding to shocks. That the financial system and also the State have been able to respond in the way they have done to this crisis is the result of a lot of actions over the past decade or so. We put ourselves in a position where we could respond quickly to the crisis. The challenge now is to start putting ourselves in a position where we can be ready for the next crisis, whether it is a sudden one, such as another pandemic, or whether it involves some of the challenges I talked about in my statement, those longer-term challenges which require economic resilience, such as the need to prepare for climate change and for international tax reform, which could impact our tax base. Those are just two examples.

As to when we need to start doing that, I do not think we need to start reducing our borrowing as that would be the wrong response right now. As the Government plans its proposed package this month, and when it thinks about its budget later in the year, it needs to think about what is that medium to longer term trajectory for debt. The final judgments will depend very much on the path of the virus and what contingencies we need to put in place.