The last post looked at the revisions of Ireland’s international investment data. Here we look for the impact the massive changes shown there have on the flows in the current account. As was shown there have been huge changes in the stock of debt associated with direct investment (both inward and outward).
Gross external debt associated with inward direct investment shows an incredible €300 billion level shift in Q1 2015 which is associated with the transfer of intangible assets to Ireland by foreign-owned MNCs. On the other hand external debt assets which is linked to outward direct investment, and likely driven by inversions and redomiciled PLCs, has been shown a strong increase since the middle of 2013 and is up around €200 billion over the period.
But we look at the flows on income on direct investment debt in the current account we see the following:
The flows have barely moved over the period. The stability on the outflows seems particularly odd given the massive once-off level-shift of €300 billion that the first chart shows in the stock of debt. So FDI entities in Ireland have massive external debt liabilities but aren’t making increased outbound interest payments. What gives?Tweet