Ireland is likely to issue more debt in 2009 than the €18.4 billion earlier projected due to a bank bailout and further decline in the economy, the National Treasury Management Agency (NTMA) said today.
The NTMA said in October it was seeking to raise a total €18.4 billion through a combination of syndicated bond issues and auctions next year, to cover the government's 2009 borrowing requirement and bonds falling for repayment.
"Other factors, such as a further decline in economic growth and the recently announced bank recapitalisation programme, may result in a higher borrowing figure," it said.
"The €18.4 billion is a floor which could be exceeded, by how much, we don't know at this stage," NTMA Chief Executive Michael Somers told reporters. "We're probably somewhere in the low 20s (billions) in the amount of cash we have to raise next year to meet the exchequer's needs."
The government said earlier this month it would inject €5.5 billion into the country's three biggest lenders and move to take majority ownership of the weakest one, much of it financed from the national pensions reserve fund.
Ireland was the first euro zone country to slip into recession this year and despite a surprise rebound in the third quarter the government has forecast that the economy would shrink between 3 to 4 per cent in 2009.
The government has also projected a budget deficit of 7.25 per cent of GDP next year, more than twice the 3-per cent limit allowed by the European Union.
The NTMA said it would hold a series of bond auctions in 2009, to be announced at the beginning of each quarter, with the possibility of additional extraordinary auctions depending on demand, said the NTMA, the asset and liability management arm of the government.
"Bonds will be auctioned so as to achieve a target size of 8 billion euros to €10 billion for each bond," the NTMA said.
Ireland's national debt increased to €50.7 billion or 32.5 per cent of gross national product (GNP) at the end of 2008 from 23.3 per cent a year ago.
General Government Debt, used for comparisons in the EU, rose to 41.3 per cent of gross domestic product (GDP) from 24.8 percent at the end of 2007, the NTMA said.
The 2009 budget projected a rise in the government debt/GDP ratio over the 2009-2011 period, with a peak at 47.8 per cent, the NTMA said.
Ireland's exchequer borrowing requirement for 2008, originally forecast at just under €5 billion, is now seen around €13 billion, the NTMA said.
The value of the investments of Ireland's National Pensions Reserve Fund, which the government plans to tap for the bank bailout, fell by 29.5 per cent in 2008, giving it a market value of €16.4 billion, the NTMA said.
Reuters