Michael Noonan (Limerick City, Fine Gael)

As part of the memorandum of understanding on specific economic policy conditionality of the joint EU-IMF programme of financial support for Ireland, budget 2012 is to include an overall budgetary consolidation package amounting to at least €3.6 billion. This was the figure contained in the original memorandum of understanding agreed at the time of entering into the joint programme late last year and it is also the figure contained in the updated April 2011 version of the memorandum of understanding which was published following the first and second quarterly programme reviews in April of this year.

The precise nature of the measures to be implemented in 2012 will be decided upon in advance of budget 2012 in light of more up-to-date economic and fiscal data and the outcome of the comprehensive review of expenditure, which is under way.

The stability programme update submitted to the European Commission in late April forecasts the 2012 general Government deficit at 8.6% of GDP. Based on the macroeconomic and fiscal outlook at the time, this target is consistent with a level of adjustment of the order of €3.6 billion and is within the terms of the revised excessive deficit procedure recommendation issued by the ECOFIN Council last December.

Quarter 1 economic data released in recent weeks and budgetary data for the first six months of the year which were released yesterday were both broadly consistent with expectations. My Department is in the process of assessing what implications the latest macroeconomic and budgetary data might have for 2012 and beyond. Such assessment will, along with later data, inform the Government in the context of its budgetary preparations over the coming months.

The next quarterly review of the joint EU-IMF programme of financial support gets under way tomorrow and I, along with my officials, will be discussing with the external funding partners a range of economic and budgetary issues, including the current outlook for 2012.

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