The National Treasury Management Agency (NTMA), the Irish debt management agency which is responsible for the banking rescue agency NAMA, plans to raise €20 billion in the bond market this year. The Irish national debt had risen to €75.2 billion at December 31, 2009 from €37.6 billion in 2007.
Total debt service costs in 2009 of €3.2 billion were €686 million below budget. Approximately half of this difference is explained by the interest rates achieved by the NTMA on 2009 borrowing which were lower than those prevailing at the time the April Emergency Budget was agreed. The balance arises as a result of timing issues related to the cash accounting treatment of the payment of coupons on debt issued in 2009.
Ireland's national debt increased to €75.2 billion in 2009, from €50.7 billion at the end of 2008 and €37.6 billion in 2007. General Government Debt, used for comparisons in the EU, rose to 41.3 per cent of gross domestic product (GDP) in 2008 from 24.8 percent at the end of 2007.
The NTMA says the General Government Debt/GDP ratio was 64.5 per cent at end 2009. This is well below the euro area average of 78.2 per cent. General Government Debt is a “gross” measure and does not allow for the offsetting of Exchequer cash balances or the assets of National Pensions Reserve Fund against the gross position. On a net basis, Ireland’s debt/GDP ratio was 38 per cent at end 2009.
The NTMA of course does not note that GDP (gross national product), which includes the huge foreign-owned sector, flatters Ireland's figures.
The National Pensions Reserve Fund Discretionary Investment Portfolio (the Fund excluding the preference shares in Bank of Ireland and Allied Irish Banks held on the direction of the Minister for Finance) earned a return of 20.9 per cent in 2009. Since the Fund’s inception in 2001, the Investment Portfolio has delivered an annualised return of 2.6 per cent per annum. Including the bank preference shares and related warrants, which are held at cost and zero respectively, the Fund recorded a return of 11.6 per cent in 2009. At December 31, 2009 the total Fund’s value stood at €22.3 billion.
NTMA Chief Executive John Corrigan commented that the challenges which Ireland faced in the international bond markets coming into 2009 were exceptional in terms of the level of our funding requirement, investor sentiment, competition for available funds and market volatility. However, the strong liquidity position that we built up in 2008 enabled us to time our entry into the markets carefully and to take advantage of more positive investor sentiment towards Ireland as the year progressed.”
Interest payment on the national debt may take up to 25 per cent of tax revenues by 2015.