The State took on an additional €33 billion in debt over the two years of the pandemic, according to a new report from the Department of Finance.
The national debt stood at €237 billion at the end of last year.
This equates to €47,233 for every person in the country and is described in the report as ‘one of the highest in the world.’
Speaking at the launch of the fifth Annual Report on Public Debt in Ireland 2021, the Minister for Finance Paschal Donohoe said he believes the public finances “can absorb the recent level shift in public borrowing.”
On the question of possible sanctions against Russia, the Minister said this will be discussed at the Ecofin and Eurogroup meeting in Paris on Friday.
He said he was getting ‘feedback’ from companies in Ireland concerned over what form sanctions might take but he said: ‘We have an obligation to respond back proportionately but the cause of this is the actions by Russia.’
On the national debt, the Minister said that “as the economic recovery gains traction, it will be necessary to slow down, and subsequently stop, adding to our public debt.”
The report shows how Ireland’s national debt rose from 95% of GNI* just before the pandemic to 106% of GNI* at the end of last year.
The report details how approximately €30 billion was spent on supports during the pandemic.
This broke down as €4.5 billion in health, €2.6 billion in business supports, €9.8 billion in income support and €9.1 billion in labour market supports.
€4 billion is defined as ‘other’ spending.
Ireland’s expenditure on pandemic-related supports was approximately four times’ the EU average as a percentage of national income.
However, as the economy continued to grow strongly over the past two years, debt as a percentage of GNI* rose by 12% compared to a euro area average of 15%.
The national debt, measured either as a percentage of national income or on a per capita basis, peaked in 2021 and is projected to fall from this year onwards.
Among the challenges highlighted are the impact of changes to international corporate tax rules, the costs of adapting to climate change and the ageing of the population.
The report states that “…failure to raise the retirement age -and to better align it with increases in life-expectancy- would involve a serious intergenerational inequality…”.
Paschal Donohoe said a decision on the future qualifying age for the state pension is still expected to be announced at the end of next month.
The report also notes that the “sharper than anticipated pick-up in consumer price inflation” may accelerate moves by central banks to reduce their activities in the sovereign debt markets, making it more expensive for countries – including Ireland – to borrow.
The Dáil this evening heard that the wage subsidy schemes during the pandemic cost the State over €10 billion.
The Minister for Finance said that the Temporary Wage Subsidy Scheme and Employment Wage Subsidy Scheme cost €10.26 billion and protected the jobs of 690,000 people.
Taking Priority Questions, Paschal Donohoe told Aontú leader Peadar Tóibín that there is “the possibility next year that our [national] debt as a percentage of national income will be back to where we were before the pandemic”.