The CEO of the National Treasury Management Agency (NTMA) has said the chances of a future recession in Ireland are 100%.
Conor O'Kelly told the Public Accounts Committee that Ireland is in the "permanent contingency business" as it is a small open economy relying on international investors for 90% of its borrowings and we have enormous national debt of €205bn.
Sinn Féin TD David Cullinane asked about the financial risks facing Ireland in terms of national debt and the other elements of the the NTMA's remit.
He also asked what mitigating solutions are being put in place by the NTMA to protect the State from Brexit.
Mr O'Kelly replied that whether it is Brexit, Italy, corporate tax or some other challenge we have, "Ireland is a small open economy, highly indebted, relies on international investors for 90% of its borrowings".
"We're in the permanent contingency business in Ireland with the debt that we have. So whether it's Brexit or Italy or something more unlikely that we can't even think of today that will end up hitting.
"People talk about whether the bond market is predicting a recession. I'll give a prediction of recession. The chances of a recession in Ireland are 100%. So we can't afford not to have a contingency in place and we have to remain vigilant to that and we do that by having significant cash buffers at all times and by smoothing out the profile of the debt."
Ireland has a "mountain of debt" that currently stands at €205 billion, some four times higher than it was in the 2000s, said Mr O'Kelly.
He told the PAC that Ireland has paid €33bn in interest the national debt in the last five years, and €60bn in the last decade.
He has cautioned that "Ireland is not in a good position" when it comes to our national debt.
On a positive note, he welcomed Christine Lagarde's nomination as President of the European Central Bank, as she is "considered to be a dovish" and the markets have already reacted positively to news of her impending appointment.
He said: "The interest rate environment looks like it is going to remain low for the foreseeable future."
In his opening remarks to the committee, Mr O'Kelly said: "We have paid €33bn in interest over the last five years. This interest bill is enormous. We paid €60bn in interest over the last decade. That compares to €20bn in the previous decade. That is all to do with the elevated amount of debts rather than the rate of interest which a lot of people concentrate on."
He said that Ireland relies on foreign capital for 90% of its borrowings and he acknowledged that is "unusual" for European and global sovereigns. He said this leaves us "slightly more vulnerable than others in relation to financial markets."
He said the interest bill has moved down from €7.5bn to €4.5bn and this has occurred because of the interest environment created by the ECB.
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On Ms Lagarde's nomination he said: "Since Christine Lagarde's potential appointment as ECB President interest rates have fallen very dramatically further. Over the last 48 hours there has been quite a dramatic move in bond markets to yields. She is considered to be a dovish, potentially, ECB President versus some of the alternatives and the market has reacted and moved rates even lower. So the interest rate environment looks like it is going to remain low for the foreseeable future.
"Because this extraordinary low interest rate environment happened when this environment had its greatest refinancing needs and at a time where the credit rating of the country was improving, those three things came together and that environment is what allowed Ireland save so much interest."
He said that Ireland's gross debt has remained unchanged since the financial crisis and stands at €205bn, and that is "four times what it was in the 2000s and I describe this as a mountain of debt".
"There is only one way to get down a mountain and is very slowly and very carefully and not take any alternative routes and not to go back up the mountain.
"We have to try and find a way to reduce this debt over time. It will only happen very slowly but we have got to stick to the path and do that because the risks to the country of having very high debt levels are the risks that any household or business would have of carrying high risk."
He said that Ireland's debt to Government revenue stands at 251%, one of the highest in Europe and our interest bill, even though it has come down, as a percentage of Government revenue stands at 6%. "That is still way higher than our European peers, even at today's interests, even with savings we have had, that is where it still ranks.
"Ireland is not in a good position from a debt point of view," he said.
Sinn Féin's David Cullinane asked: "Before the crash came it was about €40bn and it is now €205bn. So the vast majority of it is crash or austerity-related, either through bank recapitalisation or through servicing state expenditure."
Mr O'Kelly said that this is correct.
He said that €60bn was put into the banks, although there will be a return from the bank sales taking this down to €30bn.
Fine Gael TD Kate O'Connell asked Mr O'Kelly about his reference to a 100% chance of a recession.
She asked:"The reference to the 100% chance of a recession. Is that at this point in time or is this 31st of October stuff? Can I assume that if we have a hard Brexit and you look at an 8 to 10 per cent contraction, we really are in an extremely precarious position as a country. Would it be fair to say that this morning?"
Mr O'Kelly replied: "No. I was just making a general point in terms of the long term."
He agreed with Ms O'Connell when she asked if he was saying that recession always happens as part of the cycle.
She asked: "If we are in this precarious position, which we are clearly when we are carrying that mountain of debt, and there is a hard Brexit we really could be in the depths of a recession worse than we were ten years ago? Would that be true to say?"
Mr O'Kelly said: "We have to be vigilant and we have to be ready. Our debt makes us more vulnerable than we would have been."