Silent Soaring: National Debt Takes Center Stage as Government Weighs Budget 2024

“Ireland’s Mounting National Debt Raises Concerns for Future Generations, Warns Oireachtas Committee”
Silent Soaring: National Debt Takes Center Stage as Government Weighs Budget 2024

Ireland’s national debt and its impact on future generations were highlighted during a meeting of the Oireachtas committee. Finance Minister Michael McGrath addressed the Budgetary Oversight Committee on Wednesday, revealing that current forecasts predict the general government debt to be €223.5 billion, with net debt around €40 billion less once cash, reserves, and other assets are taken into account. The Finance Minister also mentioned a debt ratio of 79% when compared to Gross National Income and 40% when compared to Gross Domestic Product.

During his address, Minister McGrath emphasized the need for more discussion on national debt, stating that it poses a burden not only on the current generation but also on future ones. He pointed out that Ireland’s gross debt per capita is high when compared to other developed countries. In 2023, approximately €3.5 billion will be paid in interest alone to service the national debt. The Finance Minister expressed the government’s intention to make maximum use of projected budget surpluses.

Last week, Minister McGrath and Public Expenditure Minister Paschal Donohoe published the Summer Economic Statement, outlining the broad parameters for Budget 2024. The statement announced an overall package of €6.4 billion, including €5.25 billion in extra expenditure and an additional tax package of €1.15 billion. Minister McGrath acknowledged his intention to breach a key government rule, citing continued inflation pressures as the reason to exceed the 5% growth ceiling on expenditure. He assured the Committee that the Government takes concerns from the Irish Fiscal Advisory Council (Ifac) and other advisors seriously and is open to questioning from the Oireachtas Budget Oversight Committee. However, he emphasized that the Government has a wider mandate to deliver on societal objectives.

During the Oireachtas Committee meeting, Minister McGrath also highlighted the “fortunate position” of the government in running a significant surplus, despite challenges such as falling purchasing power due to sticky core inflation and the “unsustainable” growth in corporate tax, half of which is considered windfall. He stated that one of the considerations when looking at projected surpluses is how to make the debt more sustainable.