January 8th, 2011, 04:16 AM
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NTMA prepares to borrow this year - may ditch EU/IMF and others
NTMA could be borrowing by end of 2011
Updated: 15:45, Friday, 7 January 2011
The cost of paying interest to service the national debt hit €4.8 billion last year, according to the National Treasury Management Agency's review for 2010.
NTMA chief executive John Corrigan also said it was possible that Ireland could be back borrowing on the international markets before the end of the year.
He also said there would be a substantial reduction in staff numbers at the National Pensions Reserve Fund, which currently has a team of around 16 or 17 people.
The national debt stood at €93.4 billion euro by the end of the year, the agency - which is responsible for managing the national debt and for borrowing money on behalf of the state - said.
The general Government debt, which includes money committed to the banks and the debt of local authorities and non-commercial semi-state companies, was €148.6 billion.
The NTMA raised €20 billion in long-term funding last year. This money was used to fund the Exchequer deficit of €18.7 billion and to refinance €1.2 billion of maturing debt. It was raised before funding conditions saw a sharp deterioration during the final quarter of the year.
NTMA chief executive John Corrigan said that 2010 had been a very challenging year.
He also said that the EU-IMF programme agreed in November does not stop the NTMA from seeking funds on the bond markets itself. He said the agency will resume borrowing 'as soon as market conditions permit'.
Mr Corrigan said that the resolution of banking sector issues was vital to addressing the funding challenges facing the state in the debt markets.
The NTMA said the value of National Pensions Reserve Fund stood at €24.4 billion by the end of December. The fund is divided into two portfolios, the discretionary portfolio, which excludes investments in AIB and Bank of Ireland, and the directed portfolio.
The discretionary portfolio is worth €14.9 billion and earned a return of 11.1% due to a strong performance on equity markets, with emerging markets performing especially well, the agency said.
The directed portfolio is worth €9.5 billion and is made up of preference share investments of €5.3 billion and ordinary shares of €4.1 billion. It saw a return of -7.9% last year.
The NTMA said that the National Pensions Reserve Fund will provide up to €10 billion of the state's €17.5 billion contribution to the €85 billion EU-IMF programme. After this the value of its assets will be about €4.9 billion, which would include funding for the proposed investments in infrastructure and water metering services.
The NTMA also oversees the operation of the National Asset Management Agency. Over the year it says NAMA made €2 billion in asset sales to pay down debt either to the agency itself or to the relevant banks.
NAMA completed the purchase of about 11,000 loans from 850 debtors with a nominal value of €71.2 billion during the year. The agency also finished its review of business plans from the top 30 developers which account for about €27 billion of the loans which have been acquired.
The implication of this is huge. If Ireland can borrow for less then the EU is offering it's going to take it. That means they can be shown the door this year if the recovery gathers pace.
It has also emerged that the new Government can reopen the whole deal with the EU/IMF and others.
Last edited by odlum833; January 8th, 2011 at 04:23 AM.