The Minister for Finance and Public Expenditure and Reform has once again warned about rising levels of government debt.
Speaking at the Institute for International and European Affairs, Paschal Donohoe said "some appear to be arguing that we make the same mistake about public debt for Ireland as was made about private debt a decade ago."
He went on to warn that the low interest rates of today will not be the low interest rates of forever.
"That which is borrowed now will have to be either paid back or refinanced at a higher interest rate in the future," Mr Donohoe said.
The Minister for Finance said he thinks the current very low rates in international debt "are not going to be a normal".
With a national debt of over €200 billion, he cautioned that minute changes in interest rates can have a very significant effect on the Irish economy.
He said there was a balance to be struck when it comes to our level of national debt.
However, the Minister said he believed the current approach of the ECB is the correct one.
In his address to the IIE today, Paschal Donohoe also said the public finances are approaching the "upper end" of the €23-30 billion deficit range of the spectrum outlined in the Stability Programme Update last month.
He said the public finances will be reassessed in October.
On the vulnerabilities #COVIDー19 has highlighted in the global economy, @Paschald, Minister @IRLDeptFinance & @IRLDeptPER, says "rather than seek to unravel #globalisation or pronounce its demise, we should be seeking to adapt it to ensure a more resilient global economy". pic.twitter.com/g93etvSTyX
— IIEA (@iiea) May 22, 2020
On Brexit, the Minister said it was "back as a risk".
He said it was too early to be pessimistic or to add to "unjusitifed optimism" because he believed we are in the "middle" of negotiations, adding that we will know before the summer.
Economist says 'time is right' for Ireland to borrow
The chief economist with Goodbody's Stockbrokers has said that Ireland "needs to borrow now and borrow big".
Speaking on RTÉ's News at One, Dermot O'Leary said he disagreed with Minister Donohoe on the timeframes, and that the time is right for Ireland to borrow.
He said it is likely we will see a deficit of close to €30 billion, which is 16% of economic output.
Mr O'Leary said next year's debt level will be 120% of the size of our economy, which is high.
But he said that "old expensive debt will be replaced with new cheap debt", and the focus should be on "spending big to keep businesses open."
