Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the cases of sovereigns, sub-sovereigns and supranational organisations that may act as a lender of last resort.

Scope performs monitoring reviews to determine whether material changes and/or changes in macro-economic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit rating’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope announces the result of each monitoring review on its website and/or on its subscription platform ScopeOne.

Scope completed the monitoring review for the Republic of Ireland (long-term local- and foreign-currency issuer and senior unsecured debt ratings: AA/Stable; short-term local- and foreign-currency issuer ratings: S-1+/Stable) on 19 January 2026.

This monitoring note does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on scoperatings.com.

Key rating factors

For the updated rating report accompanying this review, please see here.

The Republic of Ireland (Ireland)’s AA rating is underpinned by: i) a wealthy and internationally competitive economy, which supports its resilience; ii) a track record of fiscal discipline and expected fiscal surpluses over the medium term, alongside a long maturity of public debt, significant official sector ownership of government debt and a favourable refinancing profile; iii) a well-established institutional framework and the ability to attract significant foreign direct investments (FDIs); and iv) European Union (EU) and euro-area membership within a large common market, a strong reserve currency and access to regional lenders of last resort for financial institutions via the European Central Bank and the sovereign via the European Stability Mechanism.

Conversely, Ireland’s AA rating is challenged by: i) strong dependence on foreign-owned multinational enterprises (MNEs), whose highly concentrated and excess corporate tax contributions account for a significant portion of government revenue; ii) the economy’s vulnerability to a changing international business environment and geopolitics given strong trade and FDI linkages with the United States (US, AA-/Stable) and high economic openness; iii) supply-side bottlenecks, limiting capital investment spending to tackle infrastructure needs and buildup public services; and iv) high external debt levels.

Domestic economic activity, measured by modified domestic demand (MDD), is estimated to have increased by 3.9% in 2025 before moderating to 3.0% in 2026, due to the negative, albeit manageable, impact of the 15% average tariff rate on good exports agreed by the EU and US in July 2025. Despite the ongoing investigations by the US on pharmaceutical products, MNEs are expected to continue industrial operations in Ireland which serves as a strategic location and export platform within Europe. Moreover, Ireland is expected to preserve its attractive tax regime, as the ‘Pillar Two Side-by-Side Package’ approved by the OECD is consistent with the country’s effective tax rate of 15% for MNEs. Overall, economic growth is projected to remain strong in the medium term, thanks to Ireland’s favourable business environment, its ability to attract international investment flows, and the rollout of the National Development Plan (up to EUR 275.4bn of spending over 2026-2035, mainly in housing and the transport sector).

Furthermore, Ireland maintains a strong fiscal position. Scope projects the general government budget surplus at 2.0% of modified GNI (GNI*) in 2026 (1% of GDP), against 2.1% of GNI* in 2025 (1.1% of GDP), and 1.9% of GNI* on average over 2027-30 (0.9% of GDP). Corporate tax revenues are projected at EUR 34bn in 2026 (more than 20% of government revenue) according to the Department of Finance, given the introduction of the EU Minimum Tax Directive likely to increase total corporate tax receipts by an additional EUR 3-5bn from 2026 onwards.

Robust growth and large budget surpluses underpin Scope’s projections that the debt-to-GNI* ratio will decline from 65% in 2025 and to less than 55% by 2030 (with debt-to-GDP falling from 33% to 26% over the same period). Ireland maintains a large cash and liquid asset balance (EUR 38.9bn at end-December 2025) and contained funding range for 2026 (EUR 10-14bn). Scope projects that interest expenditure will moderately increase from 1.5% of general government revenue in 2025 to about 2% in 2030.

Further strengthening Ireland’s fiscal position, the government has established two long-term savings funds in 2024 (Future Ireland Fund and Infrastructure, Climate and Nature Fund) to ringfence excess corporate tax revenues. Assets reached EUR 16.5bn (about 2.5% of GDP or 5% of GNI*) as of end-December 2025 across these two funds and are expected to increase to nearly EUR 24bn by end-2026.

However, Ireland remains exposed to a potential escalation in trade tensions between the US and the EU, and strategic shifts in MNEs’ corporate structures in response to global economic fragmentation. The country’s general government balance would be in deficit excluding excess corporate tax receipts.

Ireland’s fiscal outlook is also exposed to growing spending pressures related to an ageing population (pensions, healthcare) and public investment to address infrastructure deficits and climate change. The annual drawdown of up to 3% of the Net Asset Value of the Future Ireland Fund from 2041 onwards will assist in meeting these spending challenges.

The Stable Outlook reflects Scope’s view that risks to the ratings are balanced over the next 12 to 18 months.

Upside scenarios for the long-term ratings and Outlooks are (individually or collectively):

1. Vulnerabilities to public finances were to reduce significantly, including a more diversified tax revenue base;
    
2. Vulnerabilities related to external and financial-system risks reduced substantially.

Downside scenarios for the ratings and Outlooks are (individually or collectively):

1. The fiscal outlook weakened and/or the declining debt-to-GNI* trajectory reversed, for example due to an escalation of trade tensions and/or strategic shifts in multinationals’ corporate structures;
    
2. The medium-term economic growth outlook weakened substantially;
    
3. Private-sector and financial-system risks were to increase meaningfully, impacting longer-term macro-economic and financial stability.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Rating Methodology, 27 January 2025) is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Thomas Gillet, Director

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