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Tuesday, March 08, 2011

Irish National Debt: Public spending was 57.3% of GNP in 2009; Deficits in 2008-2013 will amount to €95bn

University College Cork (UCC) economist, Seamus Coffey, estimated last December that with GDP (gross domestic product) measured at €159.6bn in 2009, total government expenditure equates to 47.1% of GDP. The equivalent GNP figures (gross national product: excluding for example the profits of multinationals operating in Ireland) are €131.2bn and a staggering 57.3%. He asked: is there a higher figure in any country? Blog post

Seamus Coffey said this week that the National Debt will be €192.8bn by the end of 2013. This is 113.5% of the IMF’s nominal GDP forecast for 2013. Here is a breakdown of the debt and the proportion attributed to each category.

  • Pre-crisis (2007) National Debt - €37.6bn, 19.5%
  • 2008-2013 deficit-related Debt - €94.9bn, 49.2%
  • Banking-related Debt - €60.5bn, 31.4%
The economist said at the end-of 2013 we will have a huge debt. One-fifth will be what we brought with us into the crisis. Less than a third will be due to the bank bailout. About half of our debt will be due to our own deficits. By 2013 the bank recapitalisations will be over, and we may even see some small return on the money poured into AIB and BOI, with the toxic property loans NAMA process also well advanced. However, our Exchequer deficits will remain and will continue to require further borrowings. With the annual deficit still estimated to be 7.5% of GDP in 2013, the 113.5% Debt/GDP ratio at that stage will continue to increase. Blog Post

Below is one of my contribution's to a thread on the Irish economy blog.

Fianna Fáil with various hangers-on was elected in Irish General Elections in 1997, 2002 and 2007 - - they had democratic mandates all through the bubble period.

The party on its own in the period 1977-1981 trebled the national debt and in 1978 a budget deficit of almost 18% was recorded - - the largest according to the IMF in the period 1970-2008.

The results of reckless mismanagement was misery for tens of thousands of people in the 1980s and large scale emigration.

You refer to ‘immorality’ but surely that should largely be levelled at the people who left a legacy of 200,000 job losses and a generational calamity?

It was an Irish government in 2008 that guaranteed existing bank debt without consultation/negotiations with the EU institutions, before firm positions were taken on saving banks.

We joined a currency union which has positives and negatives. The ECB supported the banks and it’s easy to view the seductive alternative of just walking away from debt and believe that a banking system in a bankrupt country could be funded from thin air.

The annual budget deficits in the period 2008-2013 will result in €95bn in debt according to Seamus Coffey.

Any outrage for that?

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