Dáil Éireann debate -
Thursday, 30 Mar 2000

Vol. 517 No. 2

Written Answers. - National Debt.

Bernard J. Durkan

Question:

91 Mr. Durkan asked the Minister for Finance the progress, if any, in relation to the reduction of the national debt in each of the past 3 years; the reason for the reduction; and if he will make a statement on the matter. [9422/00]

Minister for Finance (Mr. McCreevy)

The following figures give details of the level of the national debt and the general Government debt-GDP ratio – the figure normally used for purposes of international comparison – at each year end over the past three years.

	National Debt	General Government Debt-GDP Ratio
	IR£	%
1997	30,689 million	65.3
1998	29,541 million	56.6
1999	31,383 million*	52.4*

*provisional

The fall in the National Debt at end-December 1998 was due to an Exchequer surplus of IR£747 million, a favourable foreign exchange impact and other nominal movements.

The increase in the debt between 1998 and 1999 reflects the accounting effect of the securities exchange programme and the absorption of FEOGA debt – IR£375 million into the national debt. The securities exchange programme was carried out by the NTMA in 1999 in order to ensure the competitiveness of Irish Government bonds in the new euro trading environment. Under the programme old bonds with a high interest coupon were exchanged for a larger nominal amount of new bonds with a lower interest coupon close to current market rates. If the impact of these exceptional items is excluded the debt would have fallen by circa IR£1,360 million in 1999, principally due to the Exchequer surplus of IR£1,192 million. However, the increase in debt due to the programme will be compensated for by a reduction in debt service costs as lower coupons are paid on the increased amount of debt. In other words, the market value of the debt is not affected by the exchange of bonds. The overall effect of the programme is that the Exchequer should be able to raise funds at a cheaper rate than would otherwise be the case.

The payment in 1999 of IR£3,015 million, comprising of a proportion of Telecom receipts and a contribution of 1% of GNP, to the temporary holding fund for superannuation liabilities is not reflected in the figures set out above. Legislation is currently being prepared by my Department for the part-prefunding of future public pension liabilities. Moneys in the temporary holding fund will be utilised for these purposes upon enactment of the legislation.