Ireland's national debt as a proportion of gross domestic product continued to fall last year and the National Treasury Management Agency believes that a further reduction in debt/GDP is likely in the current year.
Figures from the NTMA also show that positive interest rate and exchange rate movements meant that the cost of servicing the national debt last year was €295 million (£232.3 million) below budget.
The debt/GDP ratio fell from 39 per cent to 36 per cent last year and this means that Ireland has the second lowest debt ratio in the EU, only bettered by Luxembourg.
The 36 per cent figure compares with 38 per cent in the UK, 57 per cent in France, 59 per cent in Germany and more than 100 per cent in Greece, Belgium and Italy.
Ireland's debt/GDP ratio is now less than 60 per cent of the EU average, compared to 162 per cent of that average 10 years ago.
The NTMA's chief executive, Dr Michael Somers, said that based on Budget figures, the debt/GDP ratio should fall another two points to 34 per cent in the current year and was likely to stabilise at that level for the following two years.
The actual level of debt at end-2001 was €36.5 billion, a fractional reduction on the end-2000 level.
Interest payments as a proportion of total tax revenues fell from 7.6 per cent in 2000 to 6.7 per cent in 2001 and are a quarter of what they were in 1991 when interest payments accounted for more than 26 per cent of the entire tax take.
Last year, the NTMA raised €4 billion in debt, the bulk of which was used to refinance maturing debt.
All of this was through short-term borrowings, but this year the agency intends to introduce two new five- and 10-year bond issues worth €5 billion.
Holders of the existing 2005 and 2010 bonds will be offered switching terms into the new benchmark bonds which will be listed on the Euro MTS electronic trading platform.
Figures from the agency show the continued shift away from domestic bonds by Irish institutional investors, with the proportion of domestic debt held by overseas institutions rising from 47 per cent to 60 per cent last year.
This means that some €2.6 billion of domestic Government bonds moved from Irish to overseas investors last year alone. Before the introduction of the euro, Irish institutions held about 80 per cent of domestic debt but that proportion has halved in the space of three years.
On the new National Pension Reserve Fund, Dr Somers said that the process of hiring outside fund managers was almost complete and appointments from the NPRF Commission are likely to be made in the next three months.
The fund stands at €7.7 billion, having earned €261 million in interest in the nine months since last April.
The NPRF will be split 80-20 between equities and bonds, and of the 80 per cent proportion allocated to equities - currently almost €6.2 billion - half will be invested in euro-zone and half in non-euro-zone stocks.
The NTMA's director, Mr John Corrigan, said that 13 or 14 investment mandates would be awarded, some of which would be for passive index-based management and the others for active management.
An initial 580 mandate applications from some 200 institutions have been whittled down to 180 applications from 90 companies and the final selection of 13-14 will be made from this list. Mr Corrigan declined to comment on the split between Irish and overseas applications for the investment mandates.
He did state that there was no compulsion on any of the chosen fund managers to invest directly in Irish stocks.
The 20 per cent of the NPRF assets allocated to bonds will be split two-to-one between a passive fund managed by the NTMA itself and an actively-managed fund which will be outsourced to an outside fund manager. None of this 20 per cent allocation, however, can be invested in Irish Government bonds.
