February 16, 2011
By Staff Reporter
By Andrew Bushe
DUBLIN — The buoyant economy has sent the national debt plummeting, according to end-of-year figures, which show that in the 15 EU states, only the small wealthy country of Luxembourg now owes less than Ireland.
The national debt is now £28.7 billion. It dropped by £2.7 billion, or a record 8.6 percent on the 1999 figure, according to the National Treasury Management Agency.
The figures show a dramatic turnaround in a decade. In 1990, Ireland owed 94 percent of GDP, compared to 39 percent now.
In comparison, Italy has the highest national debt in the EU, at 112 percent. Germany’s is 60 percent, the UK is at 42 percent, and Luxembourg is just 6 percent.
Dr. Michael Somers, chief executive of the NTMA, said the interest bill to service the debt was down by 12 percent this year and this meant the cash was freed up for other purposes.
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With the continuing Celtic Tiger boom, it is expected that the debt will continue to drop sharply, with about a third of the remaining amount cleared over the next five years.
In addition to its responsibility for managing the debt, the NTMA will shortly take over the National Pensions Reserve Fund, which was set up to cushion government finances for what will be a rising bill as pension costs rise as the population ages.
Seven commissioners will be appointed to take direct control of the pension money and invest it.
The Fund, which was set up by Finance Minister Charlie McCreevy, already has over £5 billion — most of it from the Eircom flotation. The minister has pledged that 1 percent of GNP, or almost £700 million at current rates, will be set aside every year for the Fund up to 2025.
The NTMA will also be getting responsibility for cash lying dormant in financial institutions.
Following a recommendation from the Oireachtas watchdog body, the Public Accounts Committee, after its investigation of the DIRT tax scandal, legislation is being drawn up to allow the State to take over cash which has lain untouched in accounts for over 15 years.