“The positive outlook reflects the significant fiscal overperformance, particularly driven by corporation tax receipts, which are rebuilding the Irish government’s fiscal buffers,” S&P said.
Ireland’s tax collection increased by 14.9% in the first 10 months of the year, compared with the same period in 2023, as the first portion of a 14 billion euro ($14.74 billion) back-tax windfall boosted already healthy revenues.
According to Fitch, the country has a prudent domestic fiscal framework designed to mitigate risks from the large and highly-concentrated windfall corporate tax revenue.
An explosion in corporate tax revenues, mainly paid by a few large U.S. multinationals, has handed Ireland one of Europe’s few budget surpluses, and a one-off collection of back taxes from Apple Inc (NASDAQ:AAPL) is set to push that surplus to 7.5% of national income this year.
S&P estimates the Irish government will run a fiscal surplus equivalent to 7.4% of national income, 2.8% excluding the Apple’s windfall, still the highest in the eurozone.
Fitch expects Ireland’s budget surplus for 2024 to be 4.3% of gross domestic product — 1.5% excluding revenue from Apple.
“In our view, the government’s plans to stash a large portion of future surpluses into newly setup savings funds will improve Ireland’s fiscal and economic resilience,” S&P added.
S&P affirmed the “AA/A-1+” long- and short-term ratings for the country.
Both Fitch and S&P upgraded Ireland’s ratings in May due to its fiscal framework, Moody’s (NYSE:MCO) followed in August with an outlook revision to “positive” and affirmed its ratings.
($1 = 0.9498 euros)
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