Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

The recently published annual report on public debt in Ireland outlines that the interest burden of public debt is perhaps best assessed by examining the interest-to-revenue ratio, which demonstrates the percentage of total Government revenue dedicated to interest expenditure. The ratio has been on a downward trend since 2013 but remains high by EU standards. As of 2017, debt interest payments amounted to almost 8% of general Government revenue, compared with 3% prior to the financial crisis.

As the Deputy may be aware, projections of interest expenditure for the next five years can be found in the economic and fiscal outlook published in budget 2019. As a percentage of total general Government revenue, interest expenditure is projected to amount to 5.8% in 2019, 5.3% in 2020, 4.9% in 2021, 5% in 2022 and 5.1% in 2023, displaying a broadly downward trajectory. At just under €5.3 billion, general Government interest expenditure this year is expected to be close to 9% lower than in 2017, and more than 30% below it 2013 peak, since which it has been on a downward trend.

There are a number of reasons for the drop, such as the early repayment of the €22.5 billion International Monetary Fund loan facility and bilateral bond switching, in which shorter-term debt is redeemed in return for longer-term debt. This year alone, €1.4 billion of 2019 and 2020 maturities have been switched into longer-dated bonds. The European Central Bank’s quantitative easing programme has been a significant factor. The National Treasury Management Agency, NTMA, has taken advantage of these favourable market conditions to issue a large volume of long-term debt at low rates. With funding concluded for this year, the NTMA issued €17 billion in general Government bonds, at a weighted yield of 1.1% and an average maturity of 12 years.

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