Ireland debt sustainability
In according to our analytical or quantitative research we recommend to the government of Ireland the following things. Firstly we think that Ireland is on a good route to finally overcome the crises and to return on the favorable economic situation which was reached before the crises, but we still think that a few measures need to be taken. Furthermore we know that government of Ireland have chosen the austerity policy to face the crises. The measures that have been taken were reduction in public sector wages, cuts in social benefits, introduction of new pension scheme for those who are newly employed in the public sector, reduction of the employees in the public sector etc. Moreover the government has successfully restructured the banking sector, which is now adequately capitalized. To increase the revenue side, the government decided to raise a series of indirect taxes which were the increasing of the value added tax, from 21% to 23%, increasing of the tax on the motor fuels, tax on interest on savings deposits etc.
From our baseline projection we can see that the measures that country has been taken, shows a positive trend. The only reason for introducing new measures is the large size of the public debt. The assumption of the projection 1 is that the government of Ireland should take new measures for reduction of the public debt. Those measures can be made with new cuts in the public sector, with increase of the existing taxes or with introducing new taxes. With additional interventions in the public finances, the government must be careful that cuts and increases in taxes will not harm the economy growth and that will not cause unrest among the residents of Ireland.