Michael McGrath (Cork South Central, Fianna Fail)
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57. To ask the Minister for Finance the reason for the projected increase in general Government gross debt from €202.6 billion in 2017 to €208.2 billion in 2018, to €211.5 billion in 2019, to €208.2 billion in 2020 and to €209 billion in 2021; the reason for the projected increases; if they are coming from projected rises in interest rates; if they are coming from Exchequer requirements; his plans to reduce the debt; and if he will make a statement on the matter. [2485/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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Table A5 of the Economic and Fiscal Outlook, published as part of the Budget 2018 documentation, sets out the forecast nominal movements to the stock of general government gross debt.

The debt is forecast to increase out to end-2019 before declining in 2020. As can be seen from this table the primary drivers behind the increase are the ‘Exchequer borrowing requirement’ and ‘Change in Exchequer deposits’.

The Exchequer borrowing requirement forecasts reflect, inter alia, increased capital investment and contributions to the Rainy Day Fund but prudently exclude any assumptions around the State’s disposal of shareholding in a number of financial institutions, which represents an upside risk to these projections. 

The debt estimates reflect pre-funding ahead of large bond maturities in 2019 and 2020. This is reflected as an increase in Exchequer deposits in 2018 and, to a lesser extent, in 2019. This increase is temporary and unwinds in 2020.

Both general government gross debt and net debt, expressed in per cent of both GDP and modified GNI (or GNI*), are expected to continue to continue declining over the forecast period. This is consistent with the fiscal forecasts that show a continued decline in the Exchequer borrowing requirement and a general government surplus in 2020 that is expected to increase in 2021.

Table A4 shows the interest expenditure expressed in cash terms, per cent of tax revenue and per cent of GDP. As can be seen from this table, both the national debt cash interest and interest on an ESA 2010 basis (i.e. GG interest) are declining. The difference between the two measures, largely accounted for by accrual and consolidation adjustments is also shown in this table.

The average interest rate, shown in table 15, is 2.9 per cent in 2017. It is forecast to decline to 2.4 per cent by 2021.