At this moment in time we are in 2 EU manadtory debt reduction categories.
ec.europa.eu/economy_finance/eco … dex_en.htm
The Excessive Deficit procedure. We come out that in a month. We are no longer borrowing over 3% of GDP a year and had to get under that amount by end 2015. We borrowed nothing ( net) so far but will probably borrow €1.5bn net by year end and maybe €2bn. We shall shortly see the supplementary budgets in full. Today the HSE got €0.67bn and our accumulated surplus to end November was half that.
The Excessive Debt procedure. This is where we are obliged to reduce Debt to no more than 60% of GDP. I think we may come out of that by end 2016 or latest early 2017. Let me explain.
The excessive debt procedure allows a state that is making itself compliant to exit the more onerous procedural/monitoring requirement based on a historic reduction in the excessive debt by 1//20th a year over 3 years. Irelands final GDP growth for 2013 2014 and 2015 (together) is so high that we complied with the 1/20th rule simply because we grew so fast even while running an excessive deficit. Yje NTMA ran down part of its cash pile over that period too so we did not ‘borrow’ all the states borrowings in 2014 and 2015 as the NTMA had it borrowed already. . In theory we could ask to be released when final Q4 GDP comes out in April or so. We could ask now to be honest and have the dot crossing and t dotting in April.
Our debt/gdp ratio is now around 100% and the gap is therefore 40% today. We must remove 1/20th of that a year averaged over a rolling 3 years. A country growing at around 1.8% a year constant ( and perfectly balancing their books annually) would comply I reckon. If you grew 2 years out of three at 3% and shrank the other you might even still comply. It would be wise for the NTMA to keep around 4% of GDP in hand as liquid cash which they do, comfortably.
Ireland is likely to grow by 4% next year and to have an end year budget surplus of some sort, perhaps 0.5% of GDP . That will do nicely.
We are still obliged to carry on ourselves to an amount below 60% max (and as our GDP is a crazy number that means less than 50% in reality) but we would not be subject to the more onerous monitoring after exiting the procedure…which takes time to kick off again. This is called ‘abrogating’ the procedure. If we grow at 3% average for 10 years we are below 60% and sooner if some AIB selloff cash is used for retiring debt like the UK bilateral …early.
We should probably wait until we sell off AIB and clear some hard debt ( the 3 bilaterals would be a good start) as well as inject some of the proceeds BACK into the NPRF. So late 2016 or early 2017 and we should exit all procedures by then. Subject to our not going into recession/deficit we will be let get on with it.
Some more reading