It has been confirmed that Ireland has the highest national debt in Europe.
Ireland has a deficit of 14.3 percent of its gross domestic product (GDP) and has surpassed Greece's national debt, which is 13.6% of its GDP.
Ireland's deficit climbed when the EU reclassified a $5.3 billion infection into the now nationalized Anglo Irish Bank as Government spending.
"I don't think the news is shock horror. It doesn’t make us look any better," said Bloxham Stockbrokers chief economist Alan McQuaid.
The EU forecasted a shortfall of 12.5 percent in November, which is lower than the present deficit. Finance Minister Brian Lenihan said the surge in the deficit was a "once off impact."
"This a once off impact, and will not affect the Government's stated budgetary aim of reducing the deficit to below 3% of GDP by 2014" said Lenihan.
"While the headline deficit for 2009 is 14.3 percent of GDP, as a result of a technical reclassification associated with Government support provided to the banking sector, it is important to note that the underlying 2009 general Government deficit for Ireland is 11.8 percent of GDP, which is broadly similar to that projected in December's budget."
National Treasury Management Agency (NTMA) John Corrigan told an Oireachtas committee that the reclassification was a "technical issue," and it would not impact on borrowing.
Corrigan said that Ireland's international ratings agencies might move Ireland's outlook from negative to stable in the coming months.
Moody's Investors Service and Standard and Poor's both have Ireland at "negative" outlooks.
However the Government has stated that it may need to invest a further $24 billion into Anglo Irish bank.
The move will effectively double Ireland's national debt rather than reducing it as planned. It could be a potentially disastrous situation for Ireland.
Speaking to the Irish Time's Fine Gael's financial spokesman, Richard Bruton, said "It means that if the Government is to meet it's 3% budget deficit figure by 2014, as agreed with the European Commission, it will have to find significant additional savings."
"With an estimate $28 billion to be pumped into Anglo and INBS over the next ten years the Government will have to find an average of $3 billion in extra savings each year for the next four years just to meet their own targets. To put that into context, the total savings made last year from the public sector pay cuts was just over $1.35 billion."
Labour party spokeswoman Joan Bruton said, "From being one of the least indebted countries in Europe, Ireland is now well on it's way to being one of the most indebted, especially when the impending mass issue of Nama bonds is factored into the equation".
The Euro area has seen its debt grow from 2 percent in 2008 to 6.3 percent of its GDP last year.