Ireland's national debt could rise by more than €3 billion next year, on top of a €500 million increase this year. That is according to new forecasts published today by the Economic and Social Research Institute.
The ESRI report also says that the rise in our national debt, which currently stands at €36.4 billion, could be substantially higher if the pay increases recommendation by the Public Service Benchmarking body are implemented.
This latest report from the ESRI will make very sober reading for the Government and has the potential to put further pressure on Finance Minister Charlie McCreevy.
It says he is heading for an Exchequer deficit of €3.13 billion in his budget for next year. The report warns that that figure will be closer to €4 billion if the Government begin the process of implementing the public service benchmarking pay awards.
That comes on top of another €500 million the ESRI says will need to be borrowed to balance the public finances before the end of this year.
If this comes to pass, it could push our national debt to a record €41 billion, and would mean, in effect, that the Government will end up borrowing its entire contribution to the National Pension Reserve Fund, its entire contribution to the special savings incentive account scheme next year, as well as another €2 billion for next year.
The ESRI also concludes that the vast majority of the shortfall in tax revenue last year was not due to the unexpected slowdown in the economy. This is the exact opposite of the excuse given by the Department of Finance and published only last week in a report by the Comptroller and Auditor-General.
