It will take over 10 years to manage debt - think tank
IT WILL take more than 10 years for the Republic’s national debt to become manageable, a global competitiveness think tank warned yesterday.
The Swiss-based Institute for Management Development (IMD) yesterday released its yearly world competitiveness rankings, which showed the Republic has slipped two places to number 21 from 19 last year.
The institute has also introduced a new national debt-stress test, which measures individual countries’ chances of reducing the size of their liabilities to less than 60 per cent of their economies.
The IMD calculates that the Republic’s national debt will not fall below 60 per cent of its gross domestic product – the total wealth a country generates in one year – until 2021.
The Republic is ranked number 13 on a list of sinners, better than two other peripheral euro zone countries, Greece at number seven and Portugal at number three, but behind Spain at 17.
However, it singles out Greece, Portugal and Spain for having a credibility problem based on the fact that their debts are high while their ability to repay them, based on growth rates, current account balances and investments, are inadequate.
The IMD does not include Ireland in this category and includes it with other sinners which have less of a credibility problem but whose debts will limit competitiveness and citizens’ purchasing power. However, it warns that the exchequer’s 14 per cent budget deficit means the debt position will deteriorate in the short term.
Singapore and Hong Kong are the top two in this year’s overall competitiveness survey. Most of the leading countries in the survey are exporters with low budget deficits and national debts, and low unemployment.
The US remains at number three thanks to “the sheer size of its economy, a strong leadership in business and an unmatched supremacy in technology”.