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Ireland's debt and public finances. Rte article today.

  • 03-09-2018 2:53pm
    #1
    Praetorian
    Registered Users Posts: 3,711 ✭✭✭


    My post is referring to this article on Rte.

    https://www.rte.ie/news/business/2018/0903/991287-government-deficit/

    I was shocked to see Ireland's debt is so high. Obviously the bailouts added to our national debt but the figure for such a small country is still huge. We don't spend a lot like others do on military etc. I thought the last few years of growth and repayments against the debt would have had the figure significantly lower.

    I have bemoaned the lack of spending on infrastructure here in the last few years. I would have liked to have seen dart underground started and a 3 lane M1 motorway to Drogheda and a start on Dublin metro. Naively I suppose, I had it in my head that the government was not going ahead with large projects in order to concentrate on clearing debt. The interest figures are truly horrifying.

    I'm definitely not an economist, just a concerned citizen. What do ye smart punters think of it all?

    Did we not make a lot of money back with Nama? Did we stupidly let Nama dispose of assets before things bounced back? How much more could we have gotten now or in 10 years for what they sold at bargain basement prices?


Comments

  • #2
    AlmightyCushion
    Moderators, Education Moderators, Technology & Internet Moderators Posts: 35,041 Mod ✭✭✭✭AlmightyCushion


    I thought the last few years of growth and repayments against the debt would have had the figure significantly lower.

    We haven't been paying down the debt the last few years, we've actually been increasing it. Our economy has been growing a lot so out Debt to GDP ratio has decreased however the article doesn't look at this, it only looks at the actual amount of debt and how much it is per capita. Economic growth on it's own won't reduce either of those figures.


  • #3
    Geuze
    Registered Users Posts: 13,035 ✭✭✭✭Geuze


    Until we run budget surpluses, the public debt won't really fall.

    Our fiscal deficits have been falling, yes.

    But in 2017 we still ran a deficit of 1,014m, or 20m per week.


  • #4
    Avatar MIA
    Closed Accounts Posts: 6,750 ✭✭✭Avatar MIA


    AlmightyCushion wrote: »
    We haven't been paying down the debt the last few years, we've actually been increasing it. Our economy has been growing a lot so out Debt to GDP ratio has decreased however the article doesn't look at this, it only looks at the actual amount of debt and how much it is per capita. Economic growth on it's own won't reduce either of those figures.

    Ireland's GDP figure? How did one economist put it, something to do with the little folk.


  • #5
    VonZan
    Closed Accounts Posts: 320 ✭✭VonZan


    Avatar MIA wrote: »
    Ireland's GDP figure? How did one economist put it, something to do with the little folk.

    Ireland's GDP is a complete nonsense figure polluted heavily by pretty much being a first world tax haven and lax audit laws. Plenty of companies in this state are generating money but have absolutely no presence bar a big audit fee and tax fee; if any as it's perfectly legal to transfer that money out of the state tax free in administration charges from group companies etc.


  • #6
    Amirani
    Moderators, Society & Culture Moderators Posts: 12,521 Mod ✭✭✭✭Amirani


    Praetorian wrote: »
    Did we not make a lot of money back with Nama? Did we stupidly let Nama dispose of assets before things bounced back? How much more could we have gotten now or in 10 years for what they sold at bargain basement prices?

    Easy to look at this in hindsight and say NAMA should've held out until things recovered. At the time however, it didn't look like a strong recovery was likely. People were angry at the setting up of NAMA in the first place and the nationalisation of the loans, fearing that it'd be a cost of taxpayer money. NAMA has made a profit to the tax payer though, as in it's received more from selling its loans than it paid for them.

    Suggesting NAMA should sit on land banks, hoping for them to appreciate in value to make more money is just gambling with taxpayer funds and a bad use of land.


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  • #7
    Icepick
    Registered Users Posts: 2,452 ✭✭✭Icepick


    VonZan wrote: »
    Ireland's GDP is a complete nonsense figure polluted heavily by pretty much being a first world tax haven and lax audit laws. Plenty of companies in this state are generating money but have absolutely no presence bar a big audit fee and tax fee; if any as it's perfectly legal to transfer that money out of the state tax free in administration charges from group companies etc.
    GDP is also skewed by big exporters with real presence like Intel. So real products but the economic benefits are much smaller than the numbers suggest.


  • #8
    maldondo
    Registered Users Posts: 103 ✭✭maldondo


    We are quite a unique case in so far as our GNP figure is a much more accurate measure of true economic growth.

    It's not influenced by the brass plate companies where money just flows through the country rather than the underlying economic activity actually taking place here.

    And as unfashionable as it is to say it, we have little chance of reducing our national debt without control of our monetary policy and being able to provide state assistance to industry. (ie.. being in the EU)


  • #9
    Avatar MIA
    Closed Accounts Posts: 6,750 ✭✭✭Avatar MIA


    maldondo wrote: »

    And as unfashionable as it is to say it, we have little chance of reducing our national debt without control of our monetary policy and being able to provide state assistance to industry. (ie.. being in the EU)

    Notwithstanding the problems with the GDP figure, are you saying multinationals have no benefit?

    What chances of retaining our very significant per capita MN base outside of the EU?

    And if we were out of the EU we'd be supplying lots of state assistance to what was left of our economy - AND pay back debt, especially if a currency devaluation (what other monetary policy would you employ?) was carried out. Doesn't seem a likely scenario.

    We wont be paying back National Debt (aside from that recouped from the banks), but very few countries do. It will get hairy once Interest rates rise again, but being outside the EU is not the answer.


  • #10
    maldondo
    Registered Users Posts: 103 ✭✭maldondo


    All fair points. I'm not actually advocating it per say but it's a discussion that needs to be had.

    Notwithstanding the problems with the GDP figure, are you saying multinationals have no benefit?

    - Not at all but we have an over reliance on them which we should be looking at offsetting.

    What chances of retaining our very significant per capita MN base outside of the EU?

    - Probably pretty good, we could be more competitive in terms of tax breaks and assistance. Obviously we would need favourable trade deal as well.

    And if we were out of the EU we'd be supplying lots of state assistance to what was left of our economy - AND pay back debt, especially if a currency devaluation (what other monetary policy would you employ?) was carried out. Doesn't seem a likely scenario.

    - Currency devaluation is the tool indebted economies have always used to increase exports, shrink trade deficits and reduce the cost of interest payments on government debt. being in control of our own interest rates would allow us increase and decrease when it suited us not Germany.


  • #11
    Geuze
    Registered Users Posts: 13,035 ✭✭✭✭Geuze


    maldondo wrote: »

    And as unfashionable as it is to say it, we have little chance of reducing our national debt without control of our monetary policy and being able to provide state assistance to industry. (ie.. being in the EU)

    Start to run a budget surplus, and the public debt will decline.


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  • #12
    Geuze
    Registered Users Posts: 13,035 ✭✭✭✭Geuze


    Avatar MIA wrote: »

    We wont be paying back National Debt (aside from that recouped from the banks), but very few countries do. It will get hairy once Interest rates rise again, but being outside the EU is not the answer.

    Other countries are running fiscal surpluses.


    https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Public_balance,_2016_and_2017_(%C2%B9)_(Net_borrowing_or_lending_of_the_general_government_sector,_%25_of_GDP).png


  • #13
    Geuze
    Registered Users Posts: 13,035 ✭✭✭✭Geuze


    Public_balance%2C_2016_and_2017_%28%C2%B9%29_%28Net_borrowing_or_lending_of_the_general_government_sector%2C_%25_of_GDP%29.png


  • #14
    Avatar MIA
    Closed Accounts Posts: 6,750 ✭✭✭Avatar MIA


    Geuze wrote: »
    Other countries are running fiscal surpluses.


    https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Public_balance,_2016_and_2017_(%C2%B9)_(Net_borrowing_or_lending_of_the_general_government_sector,_%25_of_GDP).png


    Most of those countries are either statistically irrelevant, Oil producers (mana from heaven) or Germany. Not exactly fair comparisons. But, what they all have in common is being in the EU.

    But, the government is very weak, and was always going to do what it did.


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