Ireland's national debt 'one of the highest in the world' on a per capita basis

The only thing that matters is

1. Can we service the debt. The current repayments are approximately €10b a year

2. Who owns the debt.

Ireland will have budget surplus of ~€10b a year until 2026 based on predictions so we can easily meet the interest payments for the foreseeable future.

What Podge said.

Also, governments can't pay off debt whenever they happen to have a bit of spare cash. It's not like an overdraft. Governments raise debt by issuing government bonds, and bonds typically have a fixed interest rate and a fixed term.

For example, on 14 September last, Ireland issued €515 million worth of the 2% Treasury Bond 2045. If you hold that bond, you're entitled to be paid 2% interest until 2045, and then get a repayment of capital. The government can't change it's mind, and pay back your capital earlier than that.

Bonds like this are issued multiple times during the year, with varying durations. Also multiple times during the year bonds (which were issued in the past) fall due for repayment. A government wishing to reducing overall borrowing repays bonds as they fall due, and doesn't issue new bonds (or issues fewer new bonds than they are repaying). It follows that the rate at which overall borrowing can be reduced is limited by the rate at which bonds fall due for redemption; you can't pay off government debt faster than that.

A government can, of course, issue bonds with early redemption dates, and the more they do this, the more they roll over their debt, redeeming bonds and issuing new bonds at a faster rate. There's a tradeoff here; raising mostly short-term debt gives you more flexibility about paying it off (if you find you can afford to) but at the cost of more uncertainty about what your long term debt costs will be (because interest rates go up and down, and if you can't or don't reduce your debt when the bond falls due, you'll have to borrow at whatever the prevailing interest rate is at the time).

Ireland's debt is mostly long-dated; average maturity of Ireland's public debt is over 10 years, which I think is long by international standards. And this means we still get the benefit (and will for many years still get the benefit) of low interest rates at the time the bonds were issued; three-quarters of our public debt was issued at rates below 2%, but debt issued this year commands rates of more than 3% — meaning that, if we were rolling over our debt much faster, we'd be much more affected by rising interest rates.

Look whatever about debating the merits of what Michael D gets paid...and tbh I'm probably with you there

Not even 100k for being the head of state of a country with a population of 50 million

I don't have to do any research to know that isn't the whole story..

As I said there are software developers in their mid 20s earning more and they probably don't have to worry about being a target of assassination or work 24/7 365 running a country.

I'd be willing to bet the man's actual earnings are way in excess of that due in large part to being the prime minister and the climb to get there.

I'd imagine you have a brain too and know that as well.

So how do governments pay off debt?

You’ve outlined how governments raise debt but not how they pay off that debt.

Yes it does...if the role affords you the possibility of getting x side deals...

It's not like ordinary Joe public stacking shelves would be able to get them🤣

Hey Dave,when you are finished doing that stock take any chance you are interested in addressing the south african economic forum subsequent to your presentation at the G20 wha?

Seriously, pull the other one...the only income (direct and indirect) the leader of a country with a population of 50 million is getting comes in under 100k....

A person would need their head examined if they believed that.

Bonds and loans are repaid each year.

New bonds are issued each year.

Here is a list of outstanding bonds.

On 18-March next year, a bond will mature, and the State will repay 8bn to the bondholders.

How will the fund that? That is what the NTMA do.

They manage liquidity / borrowings, so that we laways have cash to repay debts.

Debt to GDP is not the only metric to see how things are in an economy.

The people who really decide it are the people who lend the State money. The greater the perceived risk that the State will not repay, the higher the interest rate they will demand, in return for accepting the risk of default.

Their judgements about this are of course informed by the ratings awarded by credit rating agencies.

Yeah get ya.

Now next question, who actually lends the money to governments and buys these government bonds?

Central banks? Large Companies? Hedge funds managing pensions?

Institutional investors of all kinds (including institutions owned by other states). Also individual investors, although direct holding of Irish government bonds by individual investors is a pretty small proportion of the whole.

(You may very well hold some (indirectly) yourself, if you have any of your savings invested in a managed fund, insurance product or pension fund.)

While proportions vary from time time time, currently a bit less than half of Irish long-term government bonds are held by Irish-resident institutions and individuals, and a little more than half are held by non-residents.

The bonds are freely transferrable, so the government has no control over who holds them.

The US President's salary is $400,000, plus an expenses allowance, an entertainment allowance and a travel allowance, that come to another $170k (non-taxable). Plus the use of three official residences. Plus a lifetime pension equal to the annual compensation of a cabinet secretary, currently about $230,000.

But this is cheap. The (non-executive) President of (much smaller than Ireland) Singapore is paid US$1.44 million. The non-executive President of Iraq gets just over US$800k. The Swiss Federal President, also non-executive — US$507,000.

And lets not ask what the non-executive head of state next door costs his country.

How much is rent, mortgage repayments, car costs, broadband costs, food costs, clothing cost, tuition cost, childcare costs, in Spain? Cheaper than Ireland perhaps?

Savers.

Husbands marry wives.

Landlords rent to tenants.

Savers funds flow to borrowers.

It is illegal for the ECB to directly lend to States.

However, they have done various rounds of QE, where they buy govt bonds in the secondary markets.