Alice-Mary Higgins (Independent)
Link to this: Individually | In context | Oireachtas source

I should acknowledge that we had a very good briefing from the Parliamentary Budget Office, PBO. We may officials of PBO before us in public session, if that is possible. Dr. Sweeney mentioned, and it is generally agreed, that the 60% debt-to-GDP ratio and 3% deficit are effectively arbitrary, in that there is not a sound scientific or financial rationale for setting them at those rates. However, they have been set largely because they are now mentioned in the treaties, which makes them difficult to move and adjust. As an example of how not useful or relevant they are, is it correct that only five countries currently meet the 60% debt to GDP requirement? When we talk about the countries that might fall foul of not having met these targets, I understand that only five countries currently meet the 3% deficit rule and a large number of countries, including Greece, Italy, Portugal, Spain, France and Belgium, do not meet the 60% rule. While Ireland meets the latter based on GDP, if we were to apply GNI, we would not and we would be at about 80% debt to GDP versus 60%.

Given the scale of the non-applicability and non-relevance of the rules, there is a concern at the extent to which they are still centre stage within the new plans. While they may not be movable, there are ways around them. I ask Dr. Sweeney to comment on those. Some of the ways around them included exclusions, which were being discussed. This is the question of what might get excluded when calculating whether countries are compliant with these two rules. There is also the question of timescale and the length of time, on which we seem to have got a bit stuck.

I ask Dr. Sweeney to comment on the exclusion of certain things from calculations around compliance with the rules and what the response might be where countries - in this case, the majority of countries in the EU - are not in compliance with these rules.

I refer to the 0.5% reduction in net primary expenditure that will have to be looked for as a proportion of debt. I understand that if this was applied to Ireland, the fact that our GDP is extraordinarily high would make for an extraordinarily high adjustment.