Michael McGrath (Cork South Central, Fianna Fail)
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116. To ask the Minister for Finance the change in the general Government debt from December 2007 to December 2013; the way this is broken down between the building up of cash balances, paying for Government goods and services, and recapitalisations of the banks; and if he will make a statement on the matter. [32464/14]

Michael Noonan (Limerick City, Fine Gael)
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General government debt reported by the CSO from December 2007 to December 2013 is as follows:

Accumulated exchequer cash and deposit (other short-term investment) balances which were included in the composition of debt are:

Spending on government goods and services is contained within the figure for general government expenditure. For the years 2007 to 2013 this amounted to:

The general government deficit represents the shortfall between receipts and expenditure. All borrowing undertaken for this purpose is included within the overall debt figure.

No specific borrowing was undertaken in order to fund the recapitalisation of Irish banks and therefore it is not possible to quantify the precise impact to government debt. However, as detailed in a previous response to parliamentary question (PQ 23246/14) regarding the interest cost of the capital injections from 2009 to 2011 I outlined that they can be separated into three categories;

(1) Capital injections that were made under Ministerial direction by the NPRF Commission amount to €18.8 billion (net of the sale of Bank of Ireland preference shares in 2013). There is no debt implications as they did not require borrowing.

(2) The promissory notes to IBRC and EBS added €30.85 billion to the general government debt, but not the national debt, in 2010. There was an interest holiday on the IBRC promissory note repayments in 2011 and 2012 and thus zero interest was payable for these years. In 2013 promissory note interest of €214 million was payable up to the date of IBRC's liquidation. General government interest is also payable on the EBS promissory note for all years with an average of €12 million payable between 2012 and 2014. Under the terms of the promissory note an annual payment €3.085 billion was to be made to the beneficiary banks. This payment was made in cash in 2011, and the IBRC element (€3.06 billion) was paid by way of a government bond in 2012. Both these payments impacted the national debt and incurred general government interest costs of approximately €0.3 billion in each of the years 2012 to 2014.  The IBRC promissory notes were cancelled and replaced with a portfolio of eight floating rate Government bonds for a total amount of €25 billion. The bonds pay interest every six months (June and December) based on the six month Euribor interest rate plus an interest margin. The margin averages 2.63% across the eight issues. This gave rise to payments of €0.65 billion in 2013 and an estimated €0.8 billion in 2014. The Deputy should note that these payments contribute significantly to the surplus income of the Central Bank, up to 80% of which is paid to the Central Fund in the following year. 

(3) By the end of 2013, €10 billion (net of the sale of Bank of Ireland equity in 2011, the sale of Irish Life and the sale of contingent capital notes in 2013) is estimated to have been paid through direct payments from the Exchequer account to the banking sector. Although no specific borrowing was made in the cases of interventions paid through the Exchequer, the impact can be estimated using the average rate of interest on government debt.

The average rate of interest on general government debt for 2013 is given as 4% in my Department's Stability Programme Update, 2014 published last month. Using this interest rate to estimate the impact of injections into the banking sector from the Exchequer account gives estimated interest costs of €0.45 billion in 2012, €0.5 billion in 2013 and €0.4 billion in 2014.

This figure excludes fees paid to the Minister under the Credit Institutions Financial Support and Eligible Liabilities Guarantee schemes amounting to €4.4 billion from 2008 to 2014.