Tommy Broughan (Dublin North East, Labour)
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Question 83: To ask the Minister for Finance if he will indicate the debt-to-GDP ratio to the end of 2011; and if he will make a statement on the matter. [7912/11]

Michael Noonan (Limerick City, Fine Gael)
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Based on the macroeconomic and fiscal outlook underpinning Budget 2011, my Department forecast, in Budget 2011, that the general Government debt-to-GDP ratio would be 98.6% in 2011. In addition to being based on the normal macroeconomic and fiscal forecasts, this forecast was also based on the assumption that a sum of €10 billion would be required to recapitalise the banking sector in 2011. It was assumed that this capital amount would be sourced from the National Pensions Reserve Fund and would therefore involve no addition to the stock of debt.

The PCAR/PLAR process has been completed and we now know that the Central Bank has concluded that a further €24 billion is required by the banking sector, some €14 billion above the amount assumed in the Budget forecast. On a purely technical assumption that this entire additional sum was to be added to the debt, the General Government debt ratio in 2011 would increase by just under 9 per cent of GDP, and would on that basis stand at approximately 107 per cent of GDP.

This technical estimate was set out in the "Presentation on Banking Reorganisation" that was published on the Department of Finance website in the aftermath of the banking announcement on 31 March. However, it is not expected that this full additional amount of recapitalisation will have to be borne by the Exchequer.

Finally, it is important to point out that there are a number of other variables that make up the estimate of the debt ratio such as the level and composition of economic growth and the prospects for the public finances. In this regard, my Department is currently in the process of revising its overall macroeconomic and fiscal forecasts, including debt estimates, in light of emerging economic, fiscal and banking data. While this process is ongoing, it is clear that the short-term prospects are somewhat weaker and this will have implications for the estimated debt ratio for 2011. These revised forecasts will be presented in the Irish Stability Programme Update which is due to be submitted to the EU Commission by the end of April in line with the terms of the new EU Semester.