The public finances continue to improve with a general government surplus recorded last year for the first time since 2007. At the same time, the strong economic performance in recent years has also seen the debt-to-income ratio fall significantly. Balancing the books is a meaningful signal of an economy moving into a more mature, sustainable phase.
That said, despite the very significant progress that has been made by this Government, at 104 per cent of GNI*, debt levels remain high by both historical and international standards. Indeed, on a per capita basis, public indebtedness stood at €42,500 per person last year, amongst the highest in the OECD. Similarly, servicing of debt represents a significant operating cost for the State, with last year’s annual payment close to the entire capital budget for 2018. These figures illustrate why fiscal sustainability remains a key priority for this Government, especially in view of the highly uncertain international environment, including the impact of Brexit, and less favourable demographics in the coming decades as the population ages.
In light of these risks, a responsible approach to managing the public finances is required. To that end, my Department recently published the Annual Report on Public Debt in Ireland 2019. This report provided in-depth analysis of current and future debt dynamics. The evidence provided in this report clearly illustrates the importance of continuing to reduce the public debt burden, while at the same time undertaking investment and structural reforms that boost domestic employment and income levels, as these can impact favourably on the burden of debt.