Michael McGrath (Cork South Central, Fianna Fail)
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The Department’s latest assessment of public indebtedness in Ireland is set out in the Annual Report on Public Debt in Ireland for 2023, published in February.

As highlighted in this report, gross public debt fell to an estimated 76 per cent of GNI* at end-2023, a significant reduction from its peak of 166 per cent of GNI* in 2012. The stock of public debt fell from €236 billion at end-2021 to €223 billion at end-2023 but remains nearly €20 billion higher than pre-pandemic levels. Additionally, the Budget 2024 forecasts envisage a modest reduction of the level of public debt by the end of 2026.

The key message from the report is that the level of indebtedness remains high, despite the downward trajectory of the debt-income ratio. Indeed, at just over €42,000 per person, Ireland has one of the highest debt per capita burdens in the world.

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. Structural aspects of Ireland’s debt stock have, so far, helped to insulate the public finances from the higher interest rate environment with the vast majority of debt locked-in at fixed rates and with a relative long average maturity profile. However, the need to re-finance maturing debt over the medium-term will likely result in higher borrowing costs. Additionally, the public finances remain vulnerable to a shock to corporation tax receipts or to the multinational sector in Ireland generally.

Moreover, looking ahead, structural economic changes such as the so-called “4Ds” (shifting demographics, decarbonisation, digitalisation and de-globalisation) pose significant challenges for the public finances.

This underlines the need for prudent management of debt and the re-building of fiscal buffers. The landmark Future Ireland Fund and Infrastructure, Climate and Nature Fund Bill 2024 was published on April 4. This bill will establish these two longer-term savings vehicles which are a key part of the Government’s fiscal risk management strategy. The accumulation of financial assets overtime will help alleviate some of the future costs of structural change in the economy.