The Economist on where Ireland's Debt will Stabilise.

Économiste Monétaire

http://www.economist.com/node/16996809

Scarab80

As per S&P they have completely disregarded NAMA loans, though they do write down the value of the liability by 4.6bn over 5 years.

Stranger they have included NPRF non-directed investments (a large portion of which is held in equity) but have not included the 7bn directed investments in BOI and AIB equity and preference shares. Further their prediction is that the non-directed investment arm of the NPRF will decline in value by 3.2bn over 5 years.

I assume that this is all based on the $500 technical memo attached to the last S&P rating. Has anyone seen that memo yet? What did they base their assumptions on?

Justin Collery

Okay, I did some pretty rudimentary extrapolation from those figures. Assume the numbers are correct, 4% growth in GDP, and also assume 2% growth in tax take, 4% average cost of borrowing. Ignore NAMA, here are the results I get:



This is simple straight line stuff. It does not show any corners being turned until 2018, and in todays money, spending being down about 33% on where it is today. Furthermore, it shows that every budget between now and 2018 requiring another €2bn to be got by tax increases or spending cuts. Feel free to correct any mistakes I may have made.

Hasschu

Since WW2 it has been safe to assume that the US economy would rebound and pull the rest of the world up with it. The lag was in the range 6 to 18 months and could be relied upon. Now we have the Canadian economy slowing down because of the continuing drop off in US demand for goods and services. The German export miracle is about to hit the rocks pulled down by declining demand within the EU and the US. Ireland has a tough row to hoe, we will survive.

noodler

What exactly are the bank recpaitalisation costs of €8.9bn in 2015?

The whole point of this eurostat deifcit classification furore was that the bulk would be included in the deficit this year.

Why they see bank recpaitaliation costs continuing past 2011 is beyond me. Personally, I can't see any more recaps being needed in 2012, nevermind 2015.

Économiste Monétaire

Davy on Irish debt.