The Minister for Finance, Public Expenditure and Reform Paschal Donohoe has said the budget deficit would increase over the next number of years.

Speaking on Today with Sean O'Rourke, Minister Donohoe said the public debt currently stands at around €201 billion.

On a per capita basis, the country's public debt is the third highest in the developed world and amounts to €42,000 for every person resident in the State.

Paschal Donohoe said the threat of Brexit would mean the Government would need to be more careful with expenditure but that next year more money would be spent.

The Minister said there would be a continued focus from the Government about how it can continue to invest in public services.

He added that next year there would be an extra spend of €1.5 billion on areas such as hospitals and schools.

In relation to the 9% VAT rate in the tourism sector, the Minister said all elements of tax policy would be reviewed. 

He said his job was to make sure that the national finances were safe and that tax appropriate policies were in place.

The Department of Finance's annual report on Public Debt in Ireland 2018 - published today - said that while the debt ratio continues to fall, this is due to strong income growth.

It added that in an increasingly uncertain world, it is important to reduce debt in order to ensure that the economy is well placed to withstand any future shocks.

The report also show that the annual interest bill on the debt amounts to €5.8 billion - €1 of every €13 spent by the State is absorbed by interest payments.

"The analysis produced by my Department clearly demonstrates the importance of continued prudent management of the public finances," the Finance Minister said. 

"We are making solid progress in getting people back to work - employment levels are now at their highest ever - and we are implementing policies that deliver steady, sustainable improvements in living standards," he stated. 

"However, at over €200 billion at the end of last year, it is crucial that we continue to stabilise the level of debt in Ireland and, subsequently, put it on a downward trajectory - this has been and will continue to be a key priority for Government," he said.

"By reducing the burden of debt we will minimise the exposure of, and risks to, the economy," he added.

Meanwhile, Taoiseach Leo Varadkar said that Brexit is entering its "ultimate phase" and the Government is seeking "minimum impact".

Speaking at the opening of aircraft leasing firm Avolon's new offices in Dublin, Mr Varadkar reiterated the need to avoid a hard border, maintain the common travel area and negotiate a free trade agreement that is "not different from status quo", which he said "will be difficult".

He said the withdrawal agreement will not sort everything out because free trade and security agreements would have to begin.

He quoted former minister for finance Michael Noonan, who after the Brexit referendum said people thought Brexit was a passing storm - that it would be "bad for a while and fine after".

However, the Taoiseach told Avolon staff that Brexit will permanently change Ireland's relationship with the UK, and the UK's relationship with Europe.