Rory O'Hanlon
Ceist:9 Dr. O'Hanlon asked the Minister for Finance the reason it was not possible to contain the national debt during 1995 and 1996 and prevent an increase of £685 million; and if he will make a statement on the matter. [4003/97]
Written Answers. - National Debt.
The increase of £685 million in the national debt to which the Deputy refers was a cumulative one composed of an increase of £983 million in 1995 and a decrease of £298 million in 1996. Thus, not only was the growth in the national debt contained in 1996, it was actually reversed — the first such fall in the absolute level of national debt in almost 40 years.
The Deputy will appreciate, however, that it is not the trend in the absolute level of the national debt which is the most important indicator of debt but the trend in the ratio of debt to GDP or GNP. The debt ratio measures the relative burden of debt on the economy and the economy's capacity to shoulder it. On this basis, Ireland's performance in recent years has been exemplary.
Thanks to the prudent budgetary policies pursued by this Government, and the strong economic growth they helped to generate, the ratio of national debt to GNP fell from 94 per cent at end-1994 to 82 per cent at end-1996. Over the same period, general Government debt as a proportion of GDP, which is the wider measure of debt relevant for Maastricht purposes, has fallen from 88 per cent to 73 per cent.
For the future, the Government intends to continue to adhere strictly to the fiscal criteria set out in the Maastricht Treaty, a commitment reflected in the 1997 budget which provides for a general Government deficit of just 1.5 per cent of GDP. In this way, the downward trend in the debt burden will be maintained into the future.