The Finance Dublin Debt Clock of Ireland

The Republic of Ireland's current official national debt, in money terms, and as a percentage of national income (a measure of how much it is leveraged):

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Ireland's national debt (NTMA definition - see 'Composition of 'National Debt' table) as a percentage of estimated 2015 GDP (€255.815 bn)* (on the left, below), and as a percentage of 2015 GNP (€202.642 bn)* (on the right):

GDP GNP

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The key to a country's economic recovery and the restoration of financial normalcy is the stabilisation of the National Debt. The national debt rises if the Government spends more than it takes in, mostly in the form of taxes. If the Government balances its books, like most households, the national debt stops rising. The Debt Clock, which rose at a catastrophic rate in the early years of the debt crisis (2008-2010) has now showed to a virtual standstill, and in terms of national income is at a point of inflexion, at which debt as a share of national income has entered on a downwards trajectory. This is being reflected in upgrades in the ROI's credit rating, with a restoration of its sovereign investment grade rating in June 2015 for the firs time since the financial crisis (It was given an A+ (stable) rating by Standard & Poors - putting it among the top 33 countries with an A+ or higher rating by that agency in June 2015).

This situation is ultimately desirable in all countries, because it means that the Government is in harmony with the households of the country it governs. If not, the households in that country will ultimately lack economic confidence in that Government, because everyone intuitively knows that the Government will ultimately have to tax the earnings/wealth of those households to make its ends meet. When such fears prevail beyond the short term, countries' economies begin to implode because households and companies domiciled in the jurisdiction begin to lose confidence in the economic system of that country, and are economically incentivised to leave it, or at least export their wealth from it, with negative impacts on the economy's growth and ultimate economic prospects.

Countries which, on the other hand, have surpluses on their Government accounts, as the Republic of Ireland did from the mid 1990s to the mid 2000s, enjoy the confidence of its resident households and enterprises and enjoy superior growth, superior tax revenues, and falling debt - in short, they enjoy a virtuous economic and debt cycle.

As long as a country's debt as percentage of its GNP and GDP remains on a rising trajectory, its future economic prospects are worsening. When this Finance Dublin Debt Clock was launched the Irish national debt stood at €65 bn, and rose catastrophically in the immediate years after that. The rate of growth slowed dramatically since then on a continued basis, and, not coincidentally, the growth rate of GNP and GDP rose, having been in sharp decline at the immediate outset of the debt crisis.

The return to growth of Ireland in 2013 (+3.4% GNP growth), followed by a growth rate of over 5 per cent since 2014 indicates that Ireland experienced an earlier than anticipated return to financial stability. Since then, the growth rate has continued on an accelerating trend.

This was accompanied by a return to bond markets by the Irish sovereign in 2013, enabling refinancing (proposed replacement) of IMF loans at rates as low as zero per cent (in mid September 2014, and below 1 p.c. in the first half of 2015). What underpinned the improved confidence in Irish Government bonds in 2013-2015 was the expectation that the debt to GDP ratio curve would peak out earlier than earlier projected beginning a downwards trajectory such as was seen through the course of the 1990s - early 2000s, the true foundation of the 'Celtic Tiger' period.

Ireland's national debt still lay on an upwards trajectory in 2015 in money terms, but, in 2016 has slowed to an annual increase of approximately €500m a year (0.15% in the first half of 2016). This reflected funding of a residual Budget deficit, which while budgeted for for 2016, is set to disappear in 2016, in light of the publication of revised GNP figures for 2015 on July 12th 2016.

The FINANCE DUBLIN Irish Government Debt Clock was set at midnight on June 30th 2009, when it was €65.278 billion (The GNP for that year was €140.3 bn - putting the Debt/GNP ratio then at 44.4%). The clock is re-set periodically, to reflect changes in debt and deficit estimates from the Dept of Finance, the National Treasury Management Agency (NTMA), and other bodies.

Significance of the Debt ratio:

When leverage approaches 100 per cent of income, economies enter enhanced risk territory because their stability, and ultimate creditworthiness diminishes, because a relatively rapidly rising debt ratio places particularly severe limitations on an economy's ability to recover fiscal balance, as the experience of Ireland since this debt clock was established (in 2009), has shown - with debt rising from €65 billion (June 2009) to the level shown above.

Diary of a Recovery

* July 12th 2016: CSO revisions issued today to Irish GNP and GDP statistics have resulted in a significant step downward in the Irish debt/national income ratio - the key indicator of the economy's national debt and Budgetary sustainability.

The national debt as a percentage of GDP fell at a stroke, by 14.6 percentage points to 93.3%, falling below the national income for the first time since the debt crisis. GDP, a less relevant indicator of Irish national income, but favoured as an indicator by the EU and OECD, shows the debt ratio falling from 94.0% to 72.3%.

* The old figures put estimated 2015 GDP at €196.565 bn, and 2015 GNP at €168.278 bn. The revised figures, published today, are the first official CSO figures for actual national income, and they show 2015 GDP at €255.815 bn, and 2015 GNP at €193.986 bn.

The scale of the revisions are remarkable, and unprecedented in national income accounting, but, despite this there can be no grounds for suspecting the methodology of compiling the statistics, which are compiled by the CSO strictly in accordance with OECD and EU national income accounting standards. Rather they genuinely reflect real economic transactions, explainable by changes in global economic circumstances and expectations. They are likely to be one off in nature, however the potential for similarly volatile movements in Irish GNP and GDP data in future years going forwards cannot be ruled out on account of the fact that while Ireland's is a small to medium sized economy in world terms, it is extremely open, and as a corporate location offers a competitive tax regime, particularly to multinational corporations who locate in Ireland for multiple reasons, incuding taxation, the common law jurisdiction, and other favourable business factors.

BREXIT - June 24th 2016: USD currrency market movements - an indicator of the short term Brexit negative economy impact on the Irish and UK economies

February 1st 2015: The Irish Exchequer recorded a surplus of €780.6 bn in January 2015, compared with a deficit of €1.142 bn in January 2014. While this turnaround does not definitely signify that Ireland's Government may undershoot its deficit target of c.3 p.c. for 2015 as a whole, the figures prompted the Finance Minister Michael Noonan to say in a statement that the debt 'is now on a downwards trajectory'. This combined with early paymwent of over half of the IMP program loans in recent months, and the issuance of a first ever 30 year bond by the Irish State in January at record low interest rates indicates that the Irish debt trajectory is at its zenith, and may shortly begin to fall as a percentage of GDP. Already, as the Finance Dublin Debt Clock figures on this page show, the debt has effectively stabilised, ending an era of austerity and debt reduction in the Irish economy, which began with the global financial collapse of 2007-2008.

January 13th 2015: Continuing in the successful vein of Irish prime rated fund raising this year, the Bank of Ireland Group today raised €750 million of 5 year covered bonds at a yield of 0.5%

December 31st 2014:

The debt total is the latest official 'National Debt', as defined by the Irish National Treasury Management Agency (NTMA). It differs from 'Gross Government Debt', (GGD) a concept generally used by Eurostat, and the EU for expressing debt figures in the EU. The official National Debt at 31/12/14 stood at €182.3 bn. The Gross total was €197.06 bn but this was offset by cash balances etc of €14.76bn. Of the total national debt, €116.34 was in the form of Government Bonds liabilities. The outstanding liability value of EU/IMF Programme Funding was €58.79 bn at December 31st 2014. It is this IMF/EU funding that the Irish Finance Ministry and NTMA are concentrating on replacing. Theoretically, if it were all replaced at Government bond yields prevailing in January 2015 (in light of the successful experience of re-funding €4 bn at 0.8 p.c. in the first week of the year) a potential once off boost to Ireland's GNP of 10% to 15% could be imparted in the medium term (2 to 3 years).

The above debt figure, as an expression of the public debt burden of the Irish economy (i.e. its leverage) is a more accurate measure of its indebtedness, expressed as a ratio of GDP/GNP. This is because the 'GGD' figure does not take into account Exchequer financial assets (including cash balances, sovereign wealth fund assets, and its revenue earning stakes in the domestic Irish banking sector such as equity and bank guarantee income) (These were estimated by the CSO at €41 billion at end 2013 in a release on 14th April 2014).

If these further assets were included as assets, the Irish net debt figure would be approximately 9 per cent of GDP lower (end 2014) than the level shown on this page (approx 90 p.c.).

Other, higher, (gross) figures, which include private debt, (nevertheless relatively high in the Republic of Ireland's case) usually do not include external assets, while expressions of total private debt, including the financial services sector, are particularly inappropriate as a measure of the Republic of Ireland's indebtedness, as they account only for foreign liabilities, but not assets, of Ireland's International Financial Services Centre (IFSC).

Note: Impact of Promissory Note replacement with sovereign debt, announcement February 7th 2013: The event is a rescheduling of debt, that, while it impacts the time value of debt obligations in a positive way for the Irish Exchequer (estimated future interest savings by economic forecasters of between €500 million and €1 billion per annum, including the NTMA, the agency charged with managing the Irish sovereign debt) does not affect the nominal, monetary value of debt expressed in the debt clock figures above. The rescheduled debt proportion of the national debt above currently represents approximately 20 per cent of the total debt, and will fall to c.18 per cent within a year, at the current rate of deficit-fuelled debt accumulation that continues.

September 18th 2014: GNP figures confirm return of boom conditions in Irish economy, as CSO data show GNP was up 7% in Q2 2014 year on year compared with Q2 2013

March 2014: Ireland's strong GNP growth recovery - Ireland records one of the developed world's highest GNP growth rates - 3.4 p.c. - in 2013

8th February 2013: Impact of Promissory Note replacement with sovereign debt

8th January: NTMA raises approximately a quarter of 2013 target funding in Syndicated Tap of 2017 bond, at 3.3 p.c. effectively marking the end of Ireland's lockout from bond markets

5th December: Reaction to the 2013 Irish Budget from analysts

14 November: Fitch is the first credit rating agency since the IMF bailout to adjust the credit rating outlook for Ireland from "negative" to "stable"

13 November: Bank of Ireland raises €1bn in covered bond market, in first public bond issue by an Irish institution in 3 years

8 November: Nobel Economics prize winner Pissarides addresses Irish Senate on youth unemployment

16 October: Editorial, Finance Dublin October: The Financial Transactions Tax fails all the tests

16 October: Ireland opts out of new FTT zone, along with leading nations globally

28 September: Deputy Governor of Irish Central Bank points to research that shows that spending cuts are most effective means of resolving Irish debt problems as Ireland prepares for its 2013 Budget.

26 July: Ireland returns to long term bond market for first time since IMF bailout, raising €5.23 bn in 5 year and 8 year maturities