Bernard Durkan (Kildare North, Fine Gael)
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75. To ask the Minister for Finance if he will indicate this country’s total debt as a percentage of GDP, GNP and GNI; and if he will make a statement on the matter. [11302/23]

Bernard Durkan (Kildare North, Fine Gael)
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This question relates to the extent of our national debt and how it impacts on our GNP, GDP, GNI or whatever, how that presents us and how accurate the measurements are.

Michael McGrath (Cork South Central, Fianna Fail)
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At the time of budget 2023, my Department forecast the total level of public debt at the end of 2022 to be €226 billion. This is a level equal to 45% of GDP, 60% of GNP or 86% of GNI*. Gross national income, or GNI* as we call it, is considered the most reliable measure of economic activity in Ireland as it removes globalisation activity and thereby provides a better measure of the domestic economy. The estimate of €226 billion is approximately €23 billion higher than levels at the end of 2019. This reflects the significant fiscal supports needed throughout the Covid-19 pandemic.

At over €44,000 for every person in the country, Ireland has one the highest per capitadebt burdens in the world. The Annual Report on Public Debt in Ireland 2022, which was published last month, provides an analysis of current debt developments in Ireland and explores the sustainability of Ireland’s debt in the context of the current macroeconomic environment. An important consideration, when assessing the sustainability of public debt, is the underlying structure of the debt and the State’s ability to make interest payments. This report shows the structure of Irish public debt insulates the public finances in the short term, given that the majority of debt is locked in at fixed rates and with relatively long maturities. Despite this, the recent rapid increase in inflation across advanced economies, as well as the associated shift in policy interest rates, highlights once again how quickly economic conditions can change. From a public finances perspective, the shift in the interest rate environment will have tangible implications into the future, and the refinancing of existing debt over the medium term will lead to increased debt servicing costs.

Additionally, Ireland’s narrow tax base, and in particular the overreliance on corporation tax receipts as a source of revenue, is a significant vulnerability. A shock to corporation tax receipts, or the income taxes that are associated with the multinational sector activity that generates these corporate revenue streams, could result in a very large deficit. Furthermore, the public finances remain exposed to an intensification of the inflationary impact of the war in Ukraine, as well as any fallout from the ICT sector shock. Looking further ahead, long-term structural changes such as the fiscal impact of shifting demographics and climate change also pose significant challenges for the public finances.

Bernard Durkan (Kildare North, Fine Gael)
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I thank the Minister for his detailed reply. I ask by way of a supplementary the extent to which Ireland is fairly treated in the international arena by the measurements to which the Minister referred, namely, GDP, GNP and GNI. Do these measurements serve the best purpose from the point of view of the projection of Ireland's image abroad in the financial services sector?

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Deputy. As part of the European fiscal architecture, the Stability and Growth Pact is expressed in terms of GDP. That is not our preferred measure for Ireland for the reasons we have put on record on many occasions. That is why we now publish the GNI* measure regularly and why we express the national debt as a percentage of GNI*. This gives us a figure of 86%. I should put on record that debt servicing costs are a key ingredient in overall debt sustainability. Debt servicing costs last year were less than €4 billion. The average maturity of our debt is about ten to 11 years and the National Treasury Management Agency, NTMA, has done an excellent job in recent years in removing those refinancing chimneys. While interest rates are now increasing for governments, including us, we are satisfied we are in a good funding position overall.

Bernard Durkan (Kildare North, Fine Gael)
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I again thank the Minister. By way of a final supplementary, is the Minister satisfied Ireland's interests are best served, notwithstanding the comments made by some well-known commentators to the effect that questions are being raised about the manner in which we measure our economic performance that suggest there is a doubt? I do not believe there is. We have accurately reflected what needs to be reflected at this particular time. This is especially so in view of the fact we are an open economy in a highly competitive arena and every measure must be used to serve the country to the best possible ends.

This must continue because we have a debt and it will remain with us for some time.

Michael McGrath (Cork South Central, Fianna Fail)
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We have been very open and transparent about the limitations of GDP as a measure, as we see it, in respect of contract manufacturing, intellectual property, IP, flows and the role of aircraft leasing. That said, it is the official measure of economic activity in Europe and, indeed, across the developed world. We will, therefore, continue to provide this information, but we will also provide what we regard as a more meaningful measure of economic activity in Ireland by means of GNI* and we are happy, at any time, to explain and engage regarding the logic behind this measure. It is an Irish construct because of the nature of our economy, but it is one we will continue to publish because we believe it is a better, more accurate and a fairer representation of the Irish economy.

Bernard Durkan (Kildare North, Fine Gael)
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I thank the Minister.