Draw Breath

There’s an interesting passage at the bottom of this article in the FT (you may have to register to access) on IL&P alleging that (UK) analysts are using inaccurate figures on Irish government exposure to banking liabilities:

Rossa White, economist with Davy stockbrokers, believed the markets were overstating the exposure of the state to the Irish banks.

He said UK analysts were using a “bogus” claim that Irish bank liabilities are close to 900 per cent of gross domestic product. “If we’re looking at this from a sovereign risk point of view, two-thirds of the figure people are using is irrelevant.”

Mr White pointed out total bank liabilities included €849bn on the balance sheets of foreign banks operating in Dublin and that, even if the undated bonds and other debt of Irish lenders were added in, total liabilities stood at €575bn, or 309 per cent of GDP, lower than the Netherlands’ 380 per cent and Belgium’s 365 per cent.

He added that Ireland’s debt interest payments would consume about 17 per cent of tax revenues in 2010. “That’s about half the amount of debt service burden experienced in the 1980s, and we never came close to defaulting then,” he said.