Ireland will likely see further upgrades to credit ratings as the country's debt burden continues to decline.
According to Davy economist Conall Mac Coille, Irish government debt is set to fall to 39.7 per cent of gross domestic product (GDP) next year.
After recording a surplus of €5.3 billion in 2022, Davy predicts Ireland could be set for a further surplus of €9 billion in 2023, and €10.7 billion in 2024.
The State's economic performance in the last 10 years has seen Ireland ahead of many of its European peers in the bonds market, with Irish debt outperforming against French, Dutch, Austrian and Belgian bonds.
"Further, the NTMA strategy of long-term debt issuance means that Ireland’s funding requirements will be negligible and low compared with peers," Mr Mac Coille said.
"Also, the pace of ECB quantitative tightening is unlikely to have a marked impact on Irish bonds. Finally, as debt ratios improve, further ratings upgrades are likely.
Mr Mac Coille claims this will lead to future upgrades to the State's credit ratings.
Risks to Ireland's debt could build during the lead up to the 2025 general election, with "inevitable" political pressure for income tax cuts and increased spending.
"Risks to our view include questions on the sustainability of corporate tax receipts and a likely focus on political trends as the next general election, due by early 2025, approaches.
"The incumbent Fianna Fáil, Fine Gael and Green parties have lost support in opinion polls in recent years, with Sinn Féin set to be the largest party after the next general election, due by early 2025.
"However, there have been few calls across the political spectrum for policies that could be perceived as posing a risk to Ireland’s successful economic model, specifically on the corporate tax regime."
