Dáil Éireann Debate, Thursday - 25 October 2012
58. Deputy Shane Ross asked the Minister for Finance the macro-economic stability and debt sustainability analyses, if any, that have been undertaken in which an assumption is that the promissory note is not repaid; and if he will make a statement on the matter. [47011/12]
View answer61. Deputy Pearse Doherty asked the Minister for Finance the macro economic stability and debt sustainability analyses if any that have been undertaken in which an assumption is that the promissory note is not repaid; and if he will make a statement on the matter. [47085/12]
View answerI propose to take Questions Nos. 58 and 61 together.
My Department undertakes and publishes macro-economic analysis on a frequent basis, including the Stability Programme Update published in April of this year and the forthcoming Medium Term Fiscal Statement. As part of this on-going and wide-ranging work, my Department examines the issue of debt sustainability. Indeed, section 4.5 of the November 2011 Medium-Term Fiscal Statement deals exclusively with an analysis of debt sustainability, outlining alternative trajectories for the debt/GDP ratio corresponding to different assumptions about the gap between the interest rate and the growth rate. Our current debt/GDP ratio is very high and stabilizing and subsequently reducing it is one of the Government’s key policy objectives. In that regard, the end-June euro area summit and more subsequent development signalling that the situation of the Irish financial sector would be examined.
In addition to my Department's own internal analysis, as part of the seventh review of the financial assistance programme, which took place in July 2012, the IMF undertook an analysis of the possible effects on the debt-sustainability of the Irish sovereign of various modes of financing could be. For illustrative purposes, scenarios considered included consideration of the promissory notes. The Fund concluded that the improvement in Ireland’s debt dynamics would depend on the modalities and the quantum under consideration. On-going discussions with the Troika are considering all options for the restructuring of the promissory notes in terms of the source of funding, the duration of the notes, the interest rate applicable etc. As the Deputy would expect our analysis is on-going and is regularly updated in the context of these discussions.
