I know that the NTMA have already admitted as much but just in case there were any remaining doubts that Eurostat are counting the promissory notes towards this year’s budget deficit, the picture below is a screencap from Eurostat’s publicly available database. Yes, our deficit in the the first quarter of 2010 was 36.51% of GDP. I believe the figure for the year will be about 20%. (Yes it’s my first time using a picture! Perhaps now you can see why.)
Category: Banking Crisis
In this new paper (joint with Gian Maria Milesi-Ferretti of the IMF), we empirically examine the factors explaining the cross-country variation in the severity of the global crisis. We find that the pre-crisis level of income per capita, increases in the ratio of private credit to GDP, current account deficits, and openness to trade are helpful in understanding the intensity of the crisis. International financial integration did little to shield domestic demand from the country-specific component of output declines, while those countries with large pre-crisis current account deficits saw domestic demand fall by much more than domestic output during the crisis. (Forthcoming in IMF Economic Review.)
The aggregate banking data for Ireland has been difficult to interpret due to the large volume of international banking activity that is routed through Dublin but which has little to do with the domestic financial system. In a welcome development, the Central Bank has re-organised how it publishes the aggregate banking data. In addition to publishing data for ‘all credit institutions’, it now also publishes data for ‘credit institutions (domestic group)’. Data and explanations are available here.
In approximate terms for June 2010, the domestic group accounts for 59 percent of the aggregate balance sheet of all credit institutions but 87 percent of domestic deposits and 87 percent of domestic loans (94 percent of loans to domestic private sector).
I surely have better things to do with my time but, yes, I spent the evening reading AIB’s half year report (with the Airtricity boys doing us proud in the background.) As John already noted, the report has a lot of pretty bad news in it, so I thought I’d point out some sort of positive news (before getting back to the bad stuff).
Liquidity Situation
The good news? Despite concerns that have been expressed about a looming “wall of cash” moment, AIB looks as though it’s in a position to get through to the end of the year paying back all its debts, though this may require ECB assistance.