Ireland: Debt Dynamics John FitzGerald Oireachtas Committee, 26 th October

Introduction Origins of Crisis Tackling the Crisis Exit from the Crisis Everything depends on solving Euro zone crisis

National Debt, Gross

Fiscal Action, € billion How much to do in 2012? €3.6 billion or €4 billion?

Exit from the Crisis Permanent loss of output Real depreciation through cutting costs Exports had a “good” crisis. Balance of Payments surplus – rising Major changes in private sector balance sheet When will private balance sheet be restored? Consumption and investment eventually rise Domestic demand is more employment intensive

Balance of Payments Surplus

General Government Deficit

Government Borrowing, % of GDP Alternative Dept. of Finance Alternative assumes: The reduction in the interest rates of July 2011 Lower than expected cost of bank recapitalisation

Debt /GDP Ratio

Preparing to Return to Markets Funded till 2013 What are funding needs post 2013? What will be the Euro area background?

Debt Repayment as of mid-2011

Conclusions Risks Everything depends on Euro zone stability Strategy for Irish return to markets 2013? To do on banks: Wean off ECB Deleverage Sell the banks to reduce debt Most important of all Return to growth