The Government will aim for a debt-to-GDP ratio of 45% within the next decade, according to the Minister for Finance, ahead of the requirements of the European Stability and Growth Pact.

Michael Noonan said Ireland’s debt-to-GDP ratio would be down to 76% by the end of this year and would continue to fall towards the European requirement of 60% in the coming years.

However given Ireland’s dependence on international trade, he said that this level of debt still posed a risk for the country as an economic shock anywhere in the globe could impact growth here.

As a result Mr Noonan said the country would instead aim to reach a ratio of 45% by the mid-2020s, as long as economic growth allowed.

This would allow a future government to borrow money in the event of a future shock while still staying within European rules, he said.

The Government would also pursue its previous aim of setting aside up to €1 billion per year to a contingency fund once the budget entered a surplus – which is forecast to happen in 2018.

These measure combined would allow for the impact of future shocks to be mitigated against, Mr Noonan said.