Michael Noonan (Limerick City, Fine Gael)

The President of the European Council, Herman Van Rompuy, held bilateral consultations with member states, including Ireland, in relation to the pact for the euro in the run up to the meeting of Heads of State and Government on 11 March last. The proposed pact focuses primarily on improving growth and competitiveness in the euro area. It outlines objectives in the policy areas of competitiveness, employment, the sustainability of public finances and the reinforcement of financial stability.

The bilateral preparatory discussions were wide ranging and took place against the background of the comprehensive package of policy measures to strengthen EMU which is under preparation for this week's European Council. The pact for the euro is due to be formally adopted by the Council tomorrow. In the context of the new European semester, member states will outline plans for the next 12 months in their national reform and stability programmes which are to be submitted to the EU Commission by end-April. This new timetable is intended to assist member states to take better account of the EU dimension in the preparation of budgetary and economic policies.

Assuming the pact is agreed as planned, we will incorporate its overall objectives as appropriate in our national plans. As the Deputy will be aware, however, Ireland's budgetary and economic strategy must be viewed in the context of the EU-IMF programme. The Government has confirmed its commitment to returning order to the public finances and to achieve a deficit of less than 3% of GDP by end-2015 in line with the agreement with the ECOFIN Council. It is also the case that our recently agreed programme for Government differs in terms of the detail of the policies which this Government plans to adopt within the broad fiscal targets. I have committed to discussing any consequent proposed changes to the programme with the IMF, European Commission and ECB and in this context the forthcoming review of the programme provides such an opportunity. It is clearly understood that any changes to the EU-IMF programme that have cost implications will have to be compensated for with alternative measures.

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