State’s public debt continues to fall since pandemic peak

Borrowings of €42,000 per person remain among highest in developed world, says Department of Finance’s annual report

The State’s public debt has continued to fall since the peak of the pandemic but remains among the highest per capita in the developed world, according to the Department of Finance’s annual report on public debt.

The report, published on Wednesday, said public debt stood at an estimated €223 billion at the end of 2023, down from a high of €236 billion in 2021 at the height of the Covid shutdown.

The chief economist in the Department, John McCarthy, has estimated that public debt will continue to fall for the rest of the decade.

At just over €42,000 per person, Ireland continues to have one of the highest gross public debt levels in the world. Mr McCarthy said only three or four other countries have higher per capita debt and mentioned Japan, Belgium and Italy.


However, the debt service burden in Ireland is relatively low, with most of it locked in at fixed rates, with a relatively long maturity profile. This has helped insulate the public finances from the changing interest rate environment in the short term.

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Mr McCarthy said the amount of tax revenue being absorbed in servicing the debt was relatively low, comprising €1 in every €40 in 2024, compared to €1 in every €8 in 2012. In the same period, gross public debt has fallen relative to gross national income from 153 per cent to 76 per cent.

The report highlights medium, and longterm challenges facing the State’s economy. It highlights four “D” risks – demographic changes, decarbonisation, digitalisation and deglobalisation.

Mr McCarthy said at present there is one pensioner for every four working people. That ratio is estimated to become one to three by 2035 and one to two by 2050. That will have implications for pensions, health, and long-term care spending, all of which will increase.

The establishment by the State of two longer-term funds will help fund these structural changes.

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Mr McCarthy also said that artificial intelligence (AI) is becoming more significant and would result in job losses, but also in job gains.

He said nobody knew at this stage what impacts AI would have on employment. Published research has estimated that, in advanced economies, 60 million jobs were at risk, but that did not mean that 60 million people would lose their jobs, he said.

The only thing that could definitely be said about AI, said Mr McCarthy, was that it would be transformative, and policy had a role to play to help rule out the possibility of “transformative bad”.

Meanwhile, Ireland had significant liquid assets of €40 billion, which brought down the net debt to €184 billion, Minister for Finance Michael McGrath said at the launch.

He said the falling debt total, the low costs associated with interest rates and long maturities had translated into a “good position in terms of cost of borrowing to the State”.

He said borrowing over 10 years was now costing the State just over 2.8 per cent of yield, which he said compared favourably to most advanced countries.

It was slightly below the cost of borrowing for France, Belgium and Finland, and only marginally above the cost of borrowing for the Netherlands.

“It shows that Ireland is now very much in the pack with core euro zone countries in terms of market sentiment and the cost of borrowing.

“That said, the gross debt of €42,000 on a per capita basis is high, and we have to acknowledge the risks. We have to ensure that we manage the public finances and our debt sustainability in a responsible way going forward,” he said.

Harry McGee

Harry McGee

Harry McGee is a Political Correspondent with The Irish Times