Martin Ferris (Kerry North, Sinn Fein)
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Question 18: To ask the Minister for Finance the approach being taken by him in respect of the Stability and Growth Pact; the timeframe he envisages for returning within the terms of the pact; the actions that need to be taken by him to bring Ireland back within the terms of the pact; and if he will make a statement on the matter. [24535/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Irish public finances, in particular tax receipts, have been very severely impacted by the sharp deterioration in our economy. Tax revenue in 2010 is expected to be in the region of €31 billion, a decline of nearly 35 per cent on the level of taxes received in 2007. The Government recognised early on that the gap that had emerged between revenues and expenditure was not sustainable. A multi-annual framework has been put in place to restore stability to the public finances and to reduce the General Government Deficit to below the 3 per cent of GDP Stability and Growth Pact limit by 2014. The European Commission, the ECB, the IMF, the OECD and respected international economic commentators are amongst those who have welcomed the plan.

The Government has already implemented significant measures to restore order to the public finances over the past two years. Beginning in July 2008, revenue raising and expenditure reducing measures designed to yield some €8 billion or 5 per cent of GDP in 2009 were introduced. In addition, Budget 2010 delivered further expenditure adjustments amounting to €4 billion or 21⁄2 per cent of GDP.

As a result of the significant corrective action taken, Budget 2010 forecast the stabilisation of the underlying deficit in 2010, notwithstanding declining economic activity. Encouragingly, there are now signs that economic conditions are stabilising and positive growth is expected in the second half of the year. The latest Exchequer figures, for the period to end-May 2010, show that the budgetary plan is on target. Recent international developments highlight the importance of continuing along the path of fiscal consolidation and, while substantial progress has already been made, further measures will be required in the years out to 2014 in order to keep the corrective process on track.

The Government's focus now is on securing the necessary adjustments for Budget 2011 and work is underway in that regard. In terms of the amount involved, €3 billion was set out in Budget 2010 as the necessary adjustment for 2011. €1 billion of that is to come from the capital expenditure side. The balance of €2 billion will come from the current side of the Budget and will be a mix of expenditure and taxation measures. The precise breakdown of this adjustment is a matter for ongoing determination in the context of my formulation of Budget 2011 and at this stage of the year I do not intend to comment on the specifics of the 2011 Budget.