Some of the most complex quantitative economic models in the world have failed to predict the real financial consequences that will flow from Ireland's Nama experiment. Moody's, the ratings agency, last week said: "It is unclear as yet what the effect of Nama will be on the Irish government's net worth."

Predictions of the agency making a profit or a loss should be discounted at this stage because the assumptions for either claim are dubious. Nobody knows how the world economy will perform over the next five years and nobody really knows how the Irish property market will perform over the next five years. Without those key inputs it is difficult to arrive at any reasonable assumption about Nama's likely impact on the country's fiscal position.

But we do know some things, even before Brian Lenihan's announcement on Wednesday. We know that Ireland's gross national debt as a percentage of GDP is set to increase hugely on the back of the Nama experiment. Estimates obviously depend on what Lenihan decides to pay for the loan assets, but broad parameters on the national debt are already clear.

Davy says gross national debt as a proportion of GDP will hit 114%, Royal Bank of Scotland comes up with a figure of 110%, and earlier this year the NTMA came up with a forecast of 103% by next year. The NTMA has admitted that setting up Nama will have "a significant impact on the gross debt ratios".

While the country has taken on mountains of debt before, the burden of Nama is very significant and will put Ireland – in terms of gross debt – at levels previously touched only by the likes of Italy and Greece.

For example, by next year Ireland will have gross debt-to-GDP of 110%, according to the paper from Royal Bank of Scotland, with Italy weighing in at 116% and Greece at 108%. Those who see Nama in a more benign light prefer to pay closer attention to net debt, which takes account of cash balances (in reality commercial paper) and the assets Nama is going to have for sale.

But the ratings agencies will be looking at gross debt and net debt, and the financial press will linger over the gross debt figure until Nama starts selling assets and redeeming (paying off) some of the bonds it will give to the banks.

To give some idea of what a 110% debt-to-GDP ratio actually means, it's worth remembering that, at the worst of the downturn in the 1987, Ireland's ratio was 118%. This is the scale of the gamble.

If Nama fails to realise value from the assets it's inheriting from the banks, Ireland will be left with the dead weight of the bank's bad debts for years in the form of a heavy debt burden, which will have to be funded by higher taxes and austere spending controls.

Hence the price at which the government buys the loan assets is vital. Overpay for the assets and the chances of realising full recovery are reduced, underpay and the chances of recovery rise, but the capital hit to the banks grows.

The crucial point is that if Nama fails to recover value equal to the bonds it issues, a legacy of high government debt could be left. Even optimistic stockbrokers acknowledge this is a risk, but they claim it's a manageable risk and Nama would have to do a disastrous job before the debt left behind became critical.

"Nama will endeavour to extract full value from the assets over a long period, possibly at least ten years,'' Davy economist Rossa White said in a recent note.

So how big is the risk? If Nama recovers only 70% of the value of the bonds it issues, what could that do to our debt levels? Davy estimates this would leave Ireland sitting on debts of 68% of GDP, hardly catastrophic, but a serious decline from where Ireland was at the start of the financial crisis – 23% of GDP. At the other end of the value scale, if Nama realises about 90% of the bonds it issues, debt would sit at the slightly more comfortable metric of 61% of GDP.

Of course markets don't stand still. The kind of prices Nama will get for the first batch of assets it sells will be watched very closely by Ireland's banks but also outside by agencies. If Nama shows early signs of not realising the kind of value it needs to, the value of outstanding bonds may start to suffer, although it's not clear if the banks would have to write these down, seeing as they are not going to be traded in the normal way but simply lodged with the European Central Bank.

The Irish banks will have moved into a new phase once they get their Nama bonds and escape their property loan problems. But the legacy will then come to rest on the national balance sheet. How bad could that legacy be and what kind of interest payments will Ireland face?

Last week Moody's tried to answer those questions. In a 'benign' scenario, it said, Ireland would make full recovery on its Nama bonds and the mass rescue of the banks would end up being "debt-neutral".

However its baseline scenarios and its "adverse" scenario were far more alarming. The baseline scenario envisages a debt-GDP ratio of 117% and interest payments taking up 13% of revenues. The adverse scenario envisages a ratio of 130%, with interest payments taking up 23.7% of the government's entire revenues.

The agency pointed out, however, that Ireland managed to turn around a deeply entrenched public debt problem before, between 1988 and 2006. Successive governments in this period reduced debt-to-GDP from 100% to 25%, but this was helped by high growth rates over 7%.

Wednesday's announcement will highlight the sheer scale of the risk Nama brings. But the government will no doubt argue that the risk of doing nothing, or of trying any of the assorted alternatives, is even greater.

European debt levels as a % of GDP

Ireland: 2009 77%; 2010 110.1%
Italy: 2009 113%; 2010 116.1%
Greece: 2009 103%; 2010 108%
Belgium: 2009 95.7%; 2010 100.9%

Source: Moody's, World Bank, European Commission, RBS