National debt is the total amount of government debt outstanding. NTMA (National Treasury management agency) borrows money on behalf of the state ie. It manages debt.
Problems with having National Debt
- Opportunity costs involved: With more funds being used to meet our annual interest repayments the government has less funds available for other purposes.
- Increased burden on taxpayers: The increase will mean that the government will have to consider increasing future taxes for taxpayers.
- Increased annual interest repayments: An increasing national debt means that the annual cost of repaying our national debt is rising.
- Diminished international credit-rating: The fact that Ireland is seen to have an increasing national debt means that our credit-rating is deteriorating.
- Euro stability pact requirements: Ireland has difficulty in meeting the conditions of the stability pact and hence corrective action must be taken in economic policy matters and agreed by the EU.
- Poor management of economy: Some citizens may become aware of the government’s poor management of the economy and this may diminish their confidence in the economy.
- Provision of Public Services / pressure on government to cut spending: Due to an increase in the national debt the government has cut back spending on certain public services, thereby affecting the provision of some services e.g. the health service; education service.