Dáil Éireann debate -
Tuesday, 3 Apr 2001

Vol. 533 No. 6

Written Answers. - Consumer Debt.

Michael D. Higgins

Question:

74 Mr. M. Higgins asked the Minister for Finance his views on the recent concerns expressed by the Governor of the Central Bank at the consequences for the economy of the continued expansion in personal borrowing; and if he will make a statement on the matter. [9737/01

Minister for Finance (Mr. McCreevy):

I propose to take Questions Nos. 66 and 74 together.

The monitoring of growth of private sector credit in Ireland and prudential supervision of credit institutions in general is a matter for the Central Bank. For the information of the Deputy some statistics on private sector credit growth in Ireland are given in the following tables. It should be noted that:

Credit extended to the private sector has been growing significantly for some time, reflecting inter alia increased employment, investment and economic activity generally. The rate of growth has slowed during 2000.

It is important to keep these growth rates in context. Although private sector credit growth of over 20% was recorded in recent years, the economy has been growing at nominal rates of up to 15% across the same time period.

The ratio of private sector credit to GDP for Ireland appears to lie in the mid-range for euro-area countries. This is also the case for the ratio of loans to households relative to GDP.

Private Sector Credit Growth in Ireland

Year	Unadjusted year-to-year % change in Credit Growth (end Dec)	Adjusted year-to-year % change in Credit Growth (end Dec)*
1995	16.9	11.2
1996	16.7	15.4
1997	29.6	23.6
1998	22.6	23.6
1999	33.5	26.9
2000	20.6	21.3

Source: Central Bank of Ireland.

Adjusted Private Sector Credit Growth in Ireland for the past 14 months*

Month	Private Sector Credit in Eur millions	Adjusted Annual Growth Rate*
January 2000	93,496	28.8
February	96,134	32.7
March	100,587	33.1
April	101,565	25.4
May	101,539	23.9
June	102,783	24.3
July	103,772	21.9
August	108,285	26.4
September	108,913	23.7
October	111,126	24.2
November	110,702	22.2
December	111,207	21.3
January 2001	112,319	20.9
February	113,317	18.2

Source: Central Bank of Ireland.

(*This adjusted series excludes transactions between credit institutions and non-monetary financial institutions IFSC companies as well as valuation effects arising from exchange rate movements. The figure for 1999 is also adjusted for the Irish Life and Permanent merger.)