The State is currently €5 billion better off than might have been expected at the beginning of 2005, the National Treasury Management Agency revealed today.
The healthy financial picture was fuelled by a much smaller than projected budget deficit in 2005 resulting in only a small increase in the National Debt, and record returns on the National Pensions Reserve Fund.
The State's balance sheet continues to improve and the National Debt at the end of 2005 stood at €38.2 billion, the agency's 2005 Annual report showed.
"The National Debt, less the National Pensions Reserve Fund and other funds managed by the NTMA, is now equivalent to only six and a half months' tax revenue," it said.
"When the NTMA was established in 1990, it took over three months' tax revenue just to pay the interest on the debt."
The NTMA said interest payments on the debt in 2005 were €1,865 million, or €257 million below budget.
"Interest costs absorb 3.7 per cent of tax revenue, about a fifth of the figure 10 years ago when the interest bill was 18.8 per cent of tax revenue," it reported.
"This reduction in the interest burden has freed up substantial resources, which the Government can use for other purposes."
Foreign investors hold 84 per cent of Irish Government bonds, up sharply from 22 per cent at the end of 1998, just before the introduction of the euro.
As in recent years, virtually all of the debt issued in 2005 was taken up by foreign investors.
The NTMA showed 83 per cent of the National Debt carried a fixed rate of interest at the end of 2005.
"The remaining 17 per cent relates to retail savings schemes," it said.
"The high level of fixed interest debt is a result of the policy of locking-in long term borrowing at historically low levels of interest, thus protecting the Exchequer against the effects of rising interest rates."
The NTMA said leading international credit rating agencies continue to regard Irish Government debt as among the best in the world.
"Moody's, Standard & Poor's, Fitch and Rating & Investment Information all continue to assign the top AAA long term credit rating to Ireland, with a stable outlook," it added.
PA