Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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Question 59: To ask the Minister for Finance his views on the deteriorating Government debt ratios that are contained in the mid-term financial statement which shows a higher Government debt in 2013, 2014 and 2015 than that contained in the April stability programme update, this despite the fact that the €3.6bn accountancy error has reduced our debt ratio by 2.3%; and if he will make a statement on the matter. [34449/11]

Michael Noonan (Limerick City, Fine Gael)
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At the time of the of the Stability Programme Update, the General Government Debt to GDP ratio was forecast to peak at 118% in 2013 before falling to 111% in 2015. This assessment was based on the macroeconomic and fiscal outlook as set at that time. Like all forecasts, these are subject to change. As events have evolved, my Department has revised its assessment for the period 2011-2015. Based on its October macroeconomic and fiscal assessment, the General Government Debt to GDP ratio is now anticipated to peak at 118% in 2013 before falling to 114% in 2015.

There are a number of reasons and assumptions why the debt ratios have changed since the April forecasts for the years from 2013 to 2015.

The macroeconomic and fiscal outlook for the period 2011-2015 has been revised. As a result of the revision the level of GDP in the later document is now lower.

Taking account of double count of HFA funding, the base line debt in 2010 improves by EUR3.6bn

Banking support is EUR3.5bn less than assumed in the SPU.

The assumed exchequer requirements (excluding banking measures) up to 2015 are higher in the later document. The main driver of this particular change is that the Department has lower economic growth forecasts resulting, for instance, in lower tax revenues forecast for the period.

As set out on page 31 of the Medium-Term Fiscal Statement, in light of further technical work since the April SPU forecasts, it has been confirmed, following discussions with the CSO, that the interest due on the Promissory Notes should be accounted for as part of General Government Debt each year. This has the effect of cumulatively worsening the debt ratio by about 0.3% of GDP in 2013 and about 1% of GDP in the following years of the forecast period.

The NTMA has changed its assumptions regarding liquid assets since the last publication. This worsens debt projections by EUR400m per annum for 2013 to 2015.

Inclusion of the pre-paid margin on EFSF lending worsens debt in 2011.

Finally, had it not been for the adjustment of the double count in the calculation of the 2010 debt level, the debt ratio would stand at 120% by 2013, based on current projections.