Oireachtas Joint and Select Committees

Tuesday, 27 April 2021

Committee on Budgetary Oversight

Draft Stability Programme Update: Engagement with Minister for Finance

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

A key feature of where we have been economically is that the country has been able to fund what we have done in the past year for two reasons. First, it is due to the support of the European Central Bank, ECB, and, second, when we came into this crisis, what we were collecting in taxation was approximately equal to what we were spending. Our national finances were in a position of broad balance. There had been a primary budget surplus since 2014 and we were due to run quite a significant surplus for this year. All of this was a massive help in the context of funding the significant measures we have had in place during the pandemic.

In the SPU, we are planning to increase current expenditure each year by 3% to 3.5%. We still plan to increase current spending when we have beaten the pandemic and as we reduce the emergency expenditure that is in place. We have a plan that shows that, before any decisions are made on top of it, growth alone would help our national finances to achieve much of the recovery and that in the aftermath of that we can continue to increase spending. It is not just an argument in respect of going back to where we were. It is about recognising that as we see an improvement in the health situation, we will have to consider how we begin the journey of ensuring that what we spend is approximately covered by what we collect in taxation.

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