Expenditure on national debt interest amounted to some €1.6 billion in 2007, some €1.5 billion in 2008 and to some €2.5 billion in 2009. In relation to bond maturities in each of the past three years, the position is set out in the table below.
Bond Maturities 2007-2009
|
€m
|
|
2007
|
6,041
|
|
2008
|
31
|
|
2009
|
5,072
|
Based on the projections for the Exchequer Borrowing Requirement for the years 2010 to 2014 as set out in Budget 2010, the estimated cost of interest on the national debt is approximately €4½ billion in 2010, €5¾ billion in 2011, €6½ billion in 2012, €7½ billion in 2013 and €7¾ billion in 2014. The National Treasury Management Agency (NTMA) has advised that, as is usual, these estimates were prepared on the basis of the prevailing market conditions for Irish Government bonds and provide for expectations with regard to market movements over the forecast period. As a technical exercise, the NTMA has estimated that the impact of a 1% increase in Ireland's spread (the premium which Ireland pays over the German 10-year benchmark bond) would be to add approximately €200 million per annum to the full-year cost of funding this year's borrowing requirement of about €20 billion. This additional cost would not only impact in 2010 but would also impact over the medium-term.
The NTMA has targeted a total bond issuance of some €20 billion in 2010. The forecast Exchequer Borrowing Requirement for 2010 is some €18.8 billion and the refinancing requirement is some €1.2 billion. The NTMA had a carryover of more than €5 billion from 2009 into 2010 and as of 18 May 2010 they have raised some €13.2 billion from the bond market, or 66% of the funding target for the year. In addition the NTMA holds large cash balances — currently over €20 billion — which allow it time its long-term issuance to take advantage of opportunities in the bond markets and to avoid periods of volatility.
