Ireland now leads the Top-20 nations with the highest level of external debt expressed as a percentage of GDP and that status is unsustainable.
External debt is a measure of foreign liabilities and in this context includes outstanding and actual current liabilities (not contingent liabilities), including principal and interest, owing by Irish residents to non-residents.
External debt generally falls into four categories:
- Public and publicly guaranteed debt
- Private non-guaranteed credits
- Central Bank deposits
- Loans due to IMF (if there are any)
The Irish banking sector accounts for $976 billion of external debt and even if this figure was wholly discounted, Ireland would still have the highest debt to GDP ratio in the world – 746%.
External debt has much graver implications that government debt because it is a reflection of how much is borrowed to sustain current living standards.
Ireland’s GDP has been shrinking while our external debt has been rising.
|External debt % GDP||Gross External Debt |
CNBC + World Bank