Stephen Donnelly (Wicklow, Independent)
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Question 223: To ask the Minister for Finance further to Parliamentary Question No 203 of 1 May 2012 regarding analysis showing that compliance with the structural deficit target as set out in the Fiscal Compact Treaty would require an equilibrium debt to GDP ratio of, say 20 to 25% for nominal growth rates of 5% and 4% respectively in this case, his views on the analysis rather than the answer given in which he stated that he was aware of the analysis; and if he will make a statement on the matter. [25130/12]

Michael Noonan (Limerick City, Fine Gael)
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What the analysis referred to by the Deputy shows is that on the basis of certain assumptions, including regarding the deficit in the public finances and nominal economic growth rates, the debt-to-GDP ratio could converge to a low level in the long-run. The analysis referred to by the Deputy is a technical, mathematical analysis. In it, it is assumed that nominal GDP grows at 4 per cent per annum and that the average deficit in the public finances is 1 per cent of GDP. On the basis of these assumptions and the application of a technical mathematical formula, it is possible to see how the debt-to-GDP ratio could converge to 25 per cent in the long-run. That said, it would also be possible to arrive at a very different long-run debt-to-GDP ratio using different assumptions. Compliance with the Stability Treaty does not require an equilibrium debt-to-GDP ratio of 20 to 25 per cent.