Dáil Éireann Debate, Tuesday - 24 July 2018
199. Deputy Pearse Doherty asked the Minister for Finance the estimated way in which European Central Bank interest rate increases of 0.1%, 0.25% and 0.5% would impact the level of yearly sovereign debt repayments in each year until 2023; and if he will make a statement on the matter. [33107/18]
Amharc ar fhreagraI am advised by the National Treasury Management Agency (NTMA) that increases in European Central Bank (ECB) interest rates would not affect the level of Ireland’s annual sovereign debt repayments in the coming years.
As of end-June 2018, the volume of medium/long-term Irish sovereign debt due to mature over the 5½ year period to end-2023 is close to €63 billion. This is just less than 30% of total Gross National Debt currently outstanding.
Any increases in ECB interest rates will not impact on those maturities although it is possible that increases in ECB interest rates could affect the cost of servicing debt. While this maturing debt is at fixed rates of interest, the cost of refinancing it could become more expensive if the ECB were to raise interest rates.
However, it is not possible to quantify in isolation the impact of any increases in ECB interest rates as there are numerous other factors affecting the yield on Irish government debt.
What I can say is that since the beginning of 2015 the NTMA has issued circa €50 billion in benchmark Irish government bonds at a weighted average yield of just above 1%. The additional full year interest impact on this level of borrowing had the average yield been 0.1%, 0.25% or 0.5% higher would be of the order of €50 million, €125 million and €250 million respectively.
Finally, I should add that the debt interest estimates set out in the April Stability Programme Update are based on prudent assumptions and reflect an increase in rates on Exchequer borrowing over the forecast period to 2021.
