National debt rises by €18.5bn in 2012

Ireland's national debt rose by €18.5 billion in 2012 to a record €137.6 billion, according to figures published yesterday by the National Treasury Management Agency (NTMA).

The bill for servicing Ireland’s national debt also rose by just under €1.1 billion to €6.5 billion last year.

The biggest component in the increase in our national debt last year was €14.9 billion borrowed to fund the exchequer deficit. This was used to pay the day-to-day bills of the State.

There was also a €3 billion instalment relating to the Irish Bank Resolution Corporation’s promissory note. This is no longer payable following an agreement this year with the EU.

The NTMA highlighted yesterday how it has successfully issued €10.5 billion in new debt this year, including a €5 billion, 10-year bond in March. This has helped eliminate a substantial bond redemption of €12 billion in January of next year.

In addition, our interest costs have fallen from 14 per cent in mid 2011 to about €3.8 billion.

Chief executive John Corrigan said this represented a "strong vote of confidence by international debt markets" in Ireland's recovery.

He said the country's financial position had been aided by agreements with our EU partners on the IBRC promissory note and an extension on the maturities of the European portion of our bailout programme. These two together would reduce the State's borrowing requirement by €40 billion over the next decade.

Drawdown
The NTMA's annual report shows that the drawdown from the EU/IMF bailout programme increased to €55.9 billion at the end of 2012 from €34.6 billion at the end of the previous year. This included a payment of almost €2 billion from the UK treasury.

Our general government deficit to GDP ratio – a gross debt measure that doesn’t take account of the State’s cash balances or financial assets – is forecast to peak this year at 123.3 per cent before reducing to 110.8 per cent by 2016.

The NTMA’s annual report shows that its employment costs rose to €51 million last year from €40 million in 2011. This reflects increased staffing levels, with the NTMA closing last year with 500 employees compared to 433 in 2011.

These figures include staff at the National Asset Management Agency (Nama) who are effectively seconded from the NTMA.

Mr Corrigan was paid a salary of €416,500 last year, down from €490,000 in 2011. He also received taxable benefits of €29,600, up just under €1,000 on the previous year.

Mr Corrigan agreed to waive 15 per cent of his salary following a request from the Minister for Finance Michael Noonan.

He also waived any consideration for performance-related pay. Fifteen of Nama's employees earned €200,000 or more at the end of 2012, while 153 were paid €100,000 or more.

Solidarity bonds
The report shows that the amount deposited on four-year and 10-year national solidarity bonds rose last year by €394 million to just over €1 billion.

The National Pension Reserve Fund, which had its remit changed by the Government recently to that of a strategic investment fund, achieved a 7.8 per cent return on its €6 billion discretionary portfolio last year.

Its “directed” portfolio, which comprises the State’s involvement in Bank of Ireland and AIB, was valued at €8.6 billion at the end of last year. The NPRF has invested €20.7 billion in the two banks.

This portfolio’s return last year was 10.5 per cent, which included a €188 million cash dividend from Bank of Ireland preference shares.