The Fiscal Responsibility Panel report reviewed the evolution of the all-important debt/revenue ratio under different scenarios — and also included a projection based on the recommendations of the Tax Reform Commission being implemented by Government.

The panel’s “base case” is consistent with the 2018 Budget, the panel wrote. “Under this scenario, the debt/revenue ratio falls at an accelerating pace, and hits the government target of 80 per cent by 2028-29, by which time the debt/GDP ratio has been reduced to 17 per cent, less than half the current level.” The panel also reviewed a “slowdown and interest rate shock” scenario. “Under this scenario, both the debt/GDP ratio and the debt/revenue ratio remain broadly flat; the debt/revenue ratio remains very high for the foreseeable future and is still close to 200 per cent in 2030. It should be noted that we do not attempt to model the worst-case scenario of a complete loss of market access (a ‘sudden stop’); in such an event, emergency fiscal measures would be necessary.”

Finally, the panel modelled the successful and timely implementation of the proposals of the TRC, which would result in a sharp rise in revenues in 2019-20 (more than 10 per cent). “This generates very positive and self-reinforcing fiscal dynamics, as interest rates also fall,” the panel wrote.