Dr. Eddie Casey:

It is a great question because it has become more complex as interest rates have fallen. Over the past couple of years, we have advanced our work in this area to develop joint modelling work with staff at the National Treasury Management Agency, NTMA, on how to do these things in a frontier way. We now use stochastic debt sustainability analysis, where we build in a very detailed interest modelling platform. We have insight into all of Ireland's debt securities, what the interest rates are on them and how long they will be fixed. We can then tell when some of the debt will run off, when we have to replace it and how expensive that will be, potentially. We look at a probability path for debt under different types of scenarios. From that, we can say there is a 15% to 20% probability that the debt ratio will remain as it is, at very high levels, or will start to rise in an unsustainable way. This takes on board the factors of having a very low interest rate and a very low debt serving burden right now. Much of that is fixed for a very long time.

Notwithstanding all those positives, there are still risks when debt is at very high levels. While there are risks that it could become unsustainable, those risks, and the uncertainties around them, are magnified when debt is at high levels. We know even less about what will happen in future because we are at a high level. Those are the risks we point to.