Ireland's Credit Outlook Revised to Positive

(Reuters) – S&P Global Ratings revised Ireland's outlook to positive from stable on Friday, citing extraordinary overperformance in corporate tax receipt collections. Peer agency Fitch affirmed its ratings at AA with a stable outlook.

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 noted.

Ireland's tax collection increased by 14.9% in the first 10 months of the year compared to the same period in 2023. A €14 billion ($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 from a few large U.S. multinationals—has given Ireland one of Europe's few budget surpluses. A one-off collection of back taxes from Apple Inc (NASDAQ: AAPL) is expected to push that surplus to 7.5% of national income this year.

S&P estimates that the Irish government will run a fiscal surplus equivalent to 7.4% of national income, with 2.8% excluding the Apple windfall, still the highest in the eurozone. Fitch expects Ireland's budget surplus for 2024 to be 4.3% of GDP—1.5% excluding revenue from Apple.

S&P believes the government's plans to allocate a large portion of future surpluses into newly established savings funds will enhance Ireland's fiscal and economic resilience.

S&P has 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, while Moody's (NYSE: MCO) followed suit in August with an outlook revision to positive and affirmed its ratings.

($1 = 0.9498 euros)