Falling interest rates are good news not only for business and borrowers but for the Government as well. With the National Treasury Management Agency (NTMA), which manages the national debt, scheduled to issue €5.5 billion worth of government bonds this year, lower rates are expected to lead to substantial savings on the State's interest bill.

The latest half percentage point cut in official euro zone interest rates - announced by European Central Bank president Mr Wim Duisenberg on June 5th - should shave around €20 million in a full year off the interest payments on the floating rate element of the national debt alone. However, this accounts for just 10 per cent of the total portfolio.

With €3.1 billion of fixed-rate bonds yet to issue this year, the NTMA should also benefit from the latest interest rate cut when auctioning fresh debt.

The next NTMA auction takes place on Thursday when the agency is due to sell €600 million of bonds due 2016, tapping into the current strong demand among investors for long-dated stock.

On Friday, 10-year euro zone government bond yields fell to record lows, helped by expectations of a further interest rate reduction from the ECB by September or October.

This could bring further good news for the agency later in the year, helping it to improve on last year's measurement ratios when the interest paid on the national debt as a portion of tax revenue fell to 5.7 per cent while it accounted for just 1.6 per cent of GNP.

Although the NTMA was forced to cancel its March auction because of depressed market conditions, due largely to the outbreak of the war in Iraq, it has had little problem selling its bonds since it resumed issuance in April.

The bulk of the Irish paper has been sold overseas with non-national investors now holding around 68 per cent of Irish debt.