Dáil Éireann Debate, Wednesday - 5 July 2017
49. Deputy Catherine Murphy asked the Minister for Finance his plans to use his position to engage with EU officials regarding Ireland's debt burden; his further plans to seek a change to Ireland's debt schedule; his views on whether this is something that should be considered particularly in the context of Brexit; and if he will make a statement on the matter. [31479/17]
View answerMy Department, in conjunction with the National Treasury Management Agency (NTMA) are constantly looking to avail of any appropriate opportunity for savings on the cost of our EU-IMF Programme loans and the matter is kept under active review.
The debt-to-GDP ratio has declined significantly in recent years although we must recognise the limitations of GDP in an Irish context. For a more meaningful assessment of trends in public debt in Ireland, therefore, it is important to look beyond this simple measure.
Other debt sustainability measures such as the debt-to-revenue ratio and the interest-to-revenue ratio are also improving.
Our economy is growing strongly; our public finance deficit is declining, as are our debt service costs and we are now running a primary budget surplus. All of this is positive from a debt sustainability perspective. In addition, the proceeds from the recent sale of part of the Government’s share-holding in AIB will reduce the overall level of public debt.
In the context of Brexit, the best and most immediate policy under the Government's control to counter the likely negative economic impacts is to continue to prudently manage the public finances. As we cannot control the international environment, we will need to continue to improve our competitiveness, including by focussing on costs we can control, by boosting our productivity, and ensuring sustainable public finances.
It should be recognised that a number of improvements to the terms of our EU-IMF Programme loans have already been secured since they were initially agreed in late 2010.
As a result of two separate maturity extensions granted to loans from the European Financial Stabilisation Mechanism (EFSM) and the European Financial Stability Facility (EFSF), Ireland’s debt repayment schedule is already quite favourable. These extensions mean that the next EFSF maturity is not until 2029 while it is not expected that Ireland will have to refinance any of its EFSM loans before 2027.
Reductions in the cost of the EFSM, EFSF and bilateral loans were also secured and these generate significant interest savings.
Furthermore, the early repayment of some 81 per cent of our IMF loans, completed in Quarter 1 2015, also generates significant interest savings and improves the debt repayment schedule as debt that was to mature over the period July 2015 – January 2021 was replaced with longer-term debt. This early repayment to the IMF required agreement from the other lenders to waive the mandatory proportional early repayment clause.
With regard to any potential further engagement, it is important to note that engagement with any one lender cannot be treated in isolation from other lenders and market expectations for when Programme loans are due to be repaid. The issue of Post-Programme Monitoring would also have to be addressed. Furthermore, any potential savings arising from possible future actions would depend on timing and prevailing market conditions.
