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Ireland’s External Debt: Economic and Statistical Realities


  • Creedon, Conn

    (Central Bank of Ireland)

  • Fitzpatrick, Trevor

    (Central Bank of Ireland)

  • Gaffney, Edward

    (Central Bank of Ireland)


This letter considers Ireland’s external debt by sector and compares Ireland to other euro area member states. External debt measures are important for assessing financial stability risks, but Irish headline external debt includes the internationally-traded financial services sector, which leads to a somewhat misleadingly high gross external debt to GDP ratio of over 1,000 per cent. Excluding IFSC entities, gross external debt was approximately 300 per cent of GDP in Q2 2012. Multinational corporations outside the IFSC contribute to this high external debt figure. Among domestic sectors, banks had large gross external debts before the crisis, while official sectors increased external borrowing after 2008. Excluding the IFSC, in Q2 2012, Ireland’s net international investment position, the broadest measure of the net external balance based on financial assets as well as liabilities, represented a liability of 98 per cent of GDP, while net external debt, a narrower measure, was 95 per cent of GDP. This is sigificantly below the gross figure, but exceeds the average for comparable euro area member states.

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  • Creedon, Conn & Fitzpatrick, Trevor & Gaffney, Edward, 2012. "Ireland’s External Debt: Economic and Statistical Realities," Economic Letters 12/EL/12, Central Bank of Ireland.
  • Handle: RePEc:cbi:ecolet:12/el/12

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    References listed on IDEAS

    1. Gros, Daniel & Alcidi, Cinzia, 2011. "Adjustment Difficulties and Debt Overhangs in the Eurozone Periphery," CEPS Papers 5525, Centre for European Policy Studies.
    2. Jochen R. Andritzky, 2012. "Government Bonds and their Investors; What Are the Facts and Do they Matter?," IMF Working Papers 12/158, International Monetary Fund.
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    Cited by:

    1. Cussen, Mary & O'Leary, Brídín, 2013. "Why are Irish Non-Financial Corporations so Indebted?," Quarterly Bulletin Articles, Central Bank of Ireland, pages 104-118, January.
    2. Yu Hsing, 2016. "Is Real Depreciation Expansionary? The Case of Ireland," Bulletin of Applied Economics, Risk Market Journals, vol. 3(1), pages 1-9.

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