Saturday, February 14, 2009
THE national debt will burst €81 billion over the next three years and could go as high as €90bn, figures released by the National Treasury Management Agency (NTMA) yesterday reveal.
The national debt stood at €51.16bn at the end of January, up from €38bn at the beginning of last year.
The NTMA said on Friday it aimed to raise €23bn this year, €3bn more than it had sought previously, due to a bigger budget deficit.
The NTMA said it had not finalised plans for bond auctions yet.
"Our intention is that we will put up an auction calendar in the reasonably near future," the NTMA’s director of funding and debt management Oliver Whelan told Reuters.
Originally, the agency planned to raise €12.4bn in 2010 and €12.5bn in 2111, while planning to retire €10.3bn in debt over the same period, €5.1bn in 2009, €1.2bn in 2010 and €4bn in 2011. With no debt increases in 2010 and 2011 the national debt will hit €81bn by 2011.
However, growing unemployment and a reduced tax take means that even more funds will have to be raised between now and 2011. And the cost of servicing government debt continues to rise.
Yesterday, the cost of protecting Irish, British and Belgian government debt against default rose to a record high, according to monitor CMA Data-Vision.
Five-year credit default swaps (CDS) on Irish government debt climbed to a record 351.3 basis points from 327.5 basis points at the New York close on Thursday, while the British equivalent hit 150.3 basis points from 146.3 basis points, CMA said.
Belgian five-year CDS edged up to 135.3 basis points from 135 bps. This means it now costs 351,300 per year to insure an exposure of 10m of Irish government bonds, up from 327,500 on Thursday, and £150,300 per year to insure an exposure of £10m of British government bonds.
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