Dáil Éireann debate -
Tuesday, 30 Jan 1996

Vol. 460 No. 6

Written Answers. - National Debt.

Seán Haughey

Question:

100 Mr. Haughey asked the Minister for Finance the absolute increase in the national debt each year for the past five years; the percentage increase in relation to the previous year for the last five years; and if he will make a statement on the matter. [1751/96]

Minister for Finance (Mr. Quinn)

The following table shows the absolute increase in the national debt and the percentage increase relative to the previous year from 1991 to 1995:

Increase in National Debt

	1991	1992	1993	1994	1995
Opening Balance (£m)	25,083	25,390	26,344	28,357	29,227
Closing Balance (£m)	25,390	26,344	28,357	29,227	30,210
Absolute Increase (£m)	307	954	2,013	870	983
% Increase	1.2%	3.8%	7.6%	3.1%	3.4%

The growth in the national debt in the course of any given year is primarily dictated by the level of the EBR. However, there are a number of other factors which can also contribute to changes in the stock of debt. The most important of these are exchange rate movements which affect the IR£ value of foreign denominated debt and discounts or premia arising on bond issues.

Adverse exchange rate movements, which raises the price of foreign currency debt in domestic currency terms, have occurred in most years. This impact was very large in 1993 due to the devaluation of the IR£ in January of that year and this added £1379 million to the national debt in 1993. However, it should be pointed out that in the case of borrowings in low interest currencies, such as the Yen or Deutsche Mark, the lower interest rates would provide an offset.

Discounts and premia on bond issues have also contributed to the accretion of debt. These arise from the issue of bonds with interest coupons above or below par value. Thus, a bond issued at a discount would result in an addition to the national debt greater than the actual amount received for the bond, andvice versa. This arises because the amount included in the national debt is not the market value of the debt but the capital amount payable on redemption, even when the redemption date is a number of years away. In all instances the return to the investor will be in line with market conditions and so where the bond is issued at a discount the increase in the stock of debt will be offset by lower interest payments.