Ireland sits on a €205bn “mountain of debt” that is four times bigger than it was in the 2000s, the Chief Executive of the National Treasury Management Agency (NTMA) Conor O’Kelly told a parliamentary committee on Thursday.
O’Kelly told the Public Accounts Committee that Ireland has paid €33bn in interest over the last five years and €60bn over the last decade to service interest on sovereign debt. In sum, the country is not in a good place. Structurally, O’Kelly pointed to the fact that Ireland depends on foreign capital to cover 90% of its borrowing needs, which makes the country more vulnerable to international capital fluctuations.
According to O’ Kelly, Ireland’s debt-to-Government revenue stands at 251%, which is one of the highest in Europe. That is different from the debt-to-GDP ratio indicator frequently quoted but suggests how far are countries prepared to address volatility. “Ireland is not in a good position from a debt point of view,” O’Kelly said.
O’Kelly hailed Christine Lagarde’s appointment as President of the ECB, as this comes with the expectation of a low-interest-rate environment that allows Ireland to service its debt. Low-interest rates have reduced the debt-servicing burden from €7.5bn to €4.5bn a year, an improvement that was all down to monetary policy.
Addressing a question by Sinn Féin MP David Cullinane, O’Kelly admitted that ineptness was linked to the need to recapitalize the Irish banks following the crash (€60bn) although he expected a return on that expenditure to the tune of €30bn.
Mr O’Kelly has projected a 100% chance of recession, especially in the event of a hard Brexit, but also due to a downward cycle, admitting that Ireland may now be more vulnerable than in 2008 when the state owed only €40bn.