National debt now €44,000 per head

The more than €200bn national debt doesn't include household and business debts, Department of Finance chief economist John McCarthy told the Dáil's Public Accounts Committee (PAC).

"People forget we have this legacy of this scale," Finance Minister Paschal Donohoe told the Oireachtas Finance Committee at a separate hearing yesterday.

The minister said a "fifth to a quarter" of the total debt is bank-related, with the rest a result of borrowing to fund spending deficits.

The minister confirmed that all of the €3.4bn in cash raised from the sale of 28pc of AIB last month will go to repay debt.

The best way to get the debt down was running budget surpluses, he said.

The Government expects a balanced budget in 2018, and to run surpluses after that.

At the PAC, Department of Finance officials said plans for a "rainy day fund" to save those surpluses were currently under review. The outcome will be announced by the minister next week in the so-called summer economic statement.

Department of Finance second secretary Anne Nolan said there was a chance cash left when Nama is wound up could be routed into spending.

She said the department may be able to develop a case for the money to be used in ways other than reducing debt, because unlike bank rescue proceeds the EU hadn't yet made a ruling on the use of the Nama surplus.

She was asked by Seán Fleming TD if she was saying that Ireland hadn't yet made a case to use the Nama funds.

"No, if we put it now they'd just say no. We have to be nearer the time," she said.