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Outline the primary responsibility of the National Treasury Management Agency (NTMA) - Leaving Cert Economics - Question 3 - 2015
Question 3
Outline the primary responsibility of the National Treasury Management Agency (NTMA). Its core function is borrowing for the exchequer and debt management in order ... show full transcript
Worked Solution & Example Answer:Outline the primary responsibility of the National Treasury Management Agency (NTMA) - Leaving Cert Economics - Question 3 - 2015
Step 1
Outline the primary responsibility of the National Treasury Management Agency (NTMA).
Answer
The primary responsibility of the National Treasury Management Agency (NTMA) is to manage the national debt and ensure liquidity for the exchequer. This involves borrowing funds as necessary to meet government financing needs and to effectively manage the government’s debts over time. By doing so, the NTMA helps to minimize the interest burden on the state, which is crucial for maintaining healthy public finances.
Step 2
Is selling bonds at a low yield good or bad for the Irish Government? Explain your answer.
Answer
Selling bonds at a low yield is generally good for the Irish Government. This is because:
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Reduced Cost of Borrowing: A low yield means lower interest payments on the funds borrowed, which reduces the overall cost of raising money for the government.
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Investor Confidence: Low yield often indicates that buyers have confidence in the Irish economy and are willing to invest in government bonds, which is beneficial for the sustainability of government financing.
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Smaller Deficit: When borrowing costs are low, the deficit can be managed more effectively, allowing the government to allocate resources more efficiently and potentially invest in essential services.