While Ireland is on the way to reigning in its national public debt to pre-pandemic levels, the Department of Finance forecasts that it will not reach this goal until after 2025.
Gross nominal debt is at €225.6 billion at the end of last year. Broken down, the debt burden stands at €44,250 for each person in the country.
“Ireland continues to have one of the highest per capita debt ratios in the developed world,” said Minister for Finance Michael McGrath in a press release.
Risks to public finances
Minister McGrath said that the report “highlights the risks” the state faces with its finances due to the pandemic’s “unavoidable increase in public indebtedness.”
The annual report on public debt shows that the state was able to pay off €10.5 billion in debt in 2022. The public finances are still vulnerable to shocks in the economy.
“In Ireland, as elsewhere, inflation has proven to be higher, broader and more persistent than initially assumed, prompting an aggressive tightening of monetary policy and higher borrowing costs for households, firms and government,” according to the annual report.
Managing the debt
While the report details that public finances are overly dependent on corporate tax revenue, windfall corporation tax however could be an opportunity to rebuild fiscal buffers, such as the National Reserve Fund.
The Department of Finance plans to carefully manage the debt burden over the next three years in a phase the department has titled as the ‘post-pandemic economic rebound.’
Minister McGrath said the state is carefully planning so it can have the money to finance an infrastructure plan that includes more housing output as well as the economy’s transition to carbon-neutrality.