Written answers

Tuesday, 7 June 2011

Department of Finance

Fiscal Policy

9:00 pm

Photo of Seán CroweSeán Crowe (Dublin South West, Sinn Fein)
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Question 28: To ask the Minister for Finance the expected ratio of spending cuts to tax increases expected in budget 2012. [14241/11]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The overall fiscal adjustment for 2012 underpinning the Joint EU/IMF Programme of Financial Support is €3.6 billion and this will be implemented through a combination of further reductions to public expenditure and additional revenue raising measures. The Programme agreed in December 2010 provides for the implementation of revenue measures designed to yield €1.5 billion in a full year and for expenditure reductions of €2.1 billion. In terms of the overall fiscal adjustment for the years 2012-2015, the ratio of expenditure-reducing to revenue-raising measures underpinning the technical budgetary forecasts set out in the recently published Stability Programme Update is approximately two to one.

The Stability Programme Update submitted to the European Commission in April forecasts the 2012 General Government deficit at 8.6% of GDP. This target is consistent with this level of fiscal adjustment and is within the terms of the revised Excessive Deficit Procedure recommendation issued by the ECOFIN Council last December.

As stated in the revised programme agreed in April 2011, the budgetary measures set out in the original agreement in December 2010 will be examined by the Government. Therefore 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 currently underway.

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