Ireland “in a better position now than after the financial crash”

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Ireland is in a much better economic position as the country returns to normal after the Covid-19 crisis than it was in the aftermath of the financial crash, an Oireachtas commission will hear on Thursday.

Conor O’Kelly, the chief executive of the National Treasury Management Agency (NTMA), is expected to tell the Public Accounts Committee that the NTMA has issued just under € 36 billion in debt since the start of the pandemic, at a average interest rate of 0.16. %.

He will tell the committee that the impact of such massive borrowing is mitigated by the fact that the European Central Bank (ECB) bought the debt of European countries on an effective one-to-one basis.

The interest bill falls

This led to a situation where Ireland’s outstanding interest bill continued to decline despite massive borrowing levels during Covid, down € 4bn to € 3.5bn. euros over the past five years.

“To put it into perspective, today our interest bill is twice as high as it was in the 1980s, but our government revenues are 10 times higher,” said O’Kelly. .

“The ECB’s policy is perhaps giving us something more valuable than low rates,” he should say. “They give us time”, in reference to the leeway needed to restructure public finances and wean the supports in place from March 2020.

Mr O’Kelly will tell the committee that the main reason Ireland was able to respond the way it did to the pandemic was that the country’s finances were in a “strong fiscal position”.

“Before the pandemic, households and businesses have been deleveraging for many years and balance sheets were in much better shape than in the previous crisis,” said Mr. O’Kelly.

In both crises, Ireland had to borrow heavily, but the returns on investment couldn’t be more different. “

However, it will also issue a note of caution.

“The question we ask ourselves in the NTMA is not whether Ireland will be hit by another economic shock, but rather what sort of shape will we be when it does.

“When the crisis hit, we had fiscal leeway when we needed it most, and in the years to come, we will have to recreate that leeway,” he said.

In the context of the current energy crisis, Mr O’Kelly will tell the committee that the NTMA, through the Irish Strategic Investment Fund, is aiming for sustainable investments of EUR 1 billion in the near future in wind power generation, energy storage and better use of resources through public services such as waste management.

He will also tell the committee that the State Claims Agency, the risk management arm of NTMA, currently handles 12,000 active claims against public bodies, with potential liabilities of more than $ 4 billion.

Regarding Apple’s tax bill, the obligation of 13 billion euros currently in dispute between the government and the European Commission, Mr. O’Kelly will specify that the fund is invested in “very low risk investments In order to maintain its capital size while awaiting a final decision from the European courts, rather than ensuring a return.


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