National debt on the up

The National Treasury Management Agency (NTMA) was set up by the Government in 1990 with the specific purpose of managing the National Debt and borrowing on behalf of the state, jobs previously carried out by the Department of Finance and the Central Bank. Money is borrowed by the NTMA in a variety of ways. Some of it comes from personal savings invested in An Post. For instance, if you put money into Post Office Savings Certificates, you are actually lending the money to the Government through the NTMA. Other funds are borrowed from financial institutions on either a short or long-term basis. Most new funding is raised by the sale of Government bonds. These are not unlike IOUs. A financial institution lends the money and in return they get an IOU (the bond) that provides a promise to repay the money at a fixed date in the future known as the maturity date and to pay interest each year.

This afternoon, the NTMA said Ireland's national debt at the end of 2008 stands at €50.7 billion, up by €13 billion on last year. The Government had originally forecast in last year's budget that the national debt would rise by €4.8 billion. For next year, the Government had forecast borrowings of €18.4 billion but this does not include any additional funding required since Budget 2009 in October or the recapitalisation programme for the banks announced earlier this month. The NTMA also revealed today that the National Pension Reserve Fund fell in value by 29.5% last year, which the government plans to tap for the bank bailout. The National Debt GDP ratio also increased from 24.8% last year to 41.3% this year.

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