Michael Noonan (Limerick City, Fine Gael)

The Deputy will be aware that Ireland is scheduled to exit the EU-IMF programme of financial support at the end of 2013. Our general Government balance targets, GGB, for 2014 and 2015, were agreed with the ECOFIN Council in December 2010. The maximum GGB permitted is minus 5.1 % of GDP in 2014 and minus 2.9 % in 2015. On the basis of the macro-economic and fiscal projections set out in April's stability programme update, my Department is currently forecasting that both of these targets will be met or marginally bettered. This is based on the agreed budgetary measures. Therefore, as I have previously said, there is nothing in the stability treaty that requires us to do more than we are already doing, over the period to 2015.

The growth forecasts set out in the recent stability programme update, SPU and the consolidation amounts outlined in last November's medium-term fiscal statement, are consistent with a general Government balance of just under minus 3% of GDP in 2015. As discussed in the SPU, the exact size of the structural component of this is, of course, uncertain. Not only do technical estimates differ, depending on the approach used, but it is also the case that estimates of the structural balance further out the forecast horizon are not fixed. Policies being implemented at present, together with future measures, can be expected to impact positively on the figures.

As I have said on a number of other occasions, reducing the structural element of the deficit will require policy action, though not necessarily taxation and expenditure adjustments. Other options are available and it is the Government's intention to pursue these. Such measures include labour market reforms, together with investment in technology and infrastructure. By boosting the productive capacity of the economy, the ambitious programme of micro-economic reforms that is already under way is expected to help reduce the structural element of the deficit by the middle part of the decade.

Additional information not given on the Floor of the House.

Under the Stability and Growth Pact, when a country is in excessive deficit, the focus of the fiscal effort is on reducing the headline deficit to below 3% of GDP. In our case, the time path to achieve this objective is end-2015. Once a country comes out of excessive deficit, the focus is on bringing a country's public finances into line with its agreed medium-term budgetary objective.

As I mentioned earlier, Ireland's medium-term budgetary objective, MTO, currently stands at 0.5% of GDP. This objective was set under the Stability and Growth Pact and well in advance of the stability treaty. Furthermore, as noted above, estimates of the structural deficit vary in an Irish context. What I can say is that we are making progress towards the achievement of our MTO, and further progress will be made in the post-2015 period on a phased basis, in accordance with a timeline to be agreed.

In terms of the debt correction rule, Ireland and the other member states currently in excessive deficit on the basis of the deficit criterion, are not subject to this at this time. For us, the priority is to stabilise our debt-to-GDP ratio. After coming out of the current excessive deficit procedure, and as a programme country, we will then be able to avail of a three-year transition period before the full one twentieth rule will apply. This means that Ireland will not be fully bound by the rule until 2019, though in the 2016-18 period, we will need to make sufficient progress in terms of reducing our debt ratio.

Lastly, I would stress again that, when it comes to meeting the debt requirement, it is reasonable to expect that economic growth will do most of the heavy lifting.

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