Written answers

Wednesday, 15 April 2015

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

162. To ask the Minister for Finance the maximum permissible budgetary adjustment possible in budget 2016, based on the latest available statistics, following negotiations with the European Union regarding Ireland's expenditure benchmark; and the way this figure is arrived at. [14544/15]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy will be aware from previous responses, it is expected that from 2016, the public finances in Ireland will be subject to the rules of the preventive arm of the Stability & Growth Pact.  Assessment of compliance with the rules of the preventive arm is based on two pillars: the annual improvement in the structural balance and the expenditure benchmark.  Budget 2016 will be framed with due regard for these assessments.

The expenditure benchmark links growth in expenditure to the potential growth rate of the economy.  Additional expenditure above the benchmark has to be paid for through the introduction of new discretionary revenue measures.  The benchmark also contains a feature than is designed to assist with achieving the minimum annual structural improvement of more than 0.5% of GDP.

On foot of my interventions at political level, my officials have been in discussions at a technical level with the European Commission and other Member States.

The aim of technical discussions has been to ensure that the methodology for calculating potential output and its implementation in the context of EU fiscal rules is applied in a manner that produces credible results that underpin the operation of a sound set of rules.

The focus of our discussions has been two pronged; firstly to improve how estimates of potential GDP are calculated for Ireland by using more appropriate population projections and secondly to apply these calculations in a more logical fashion so that the fiscal policy consistent with these rules is set based on latest available information regarding both the outturn and prospects for the Irish economy.

Discussions are progressing but final decisions at a technical level must be endorsed at the relevant committees. As such, I do not want to prejudice these ongoing discussions by providing specific figures at this stage.

It is hoped that the relevant decisions will be made in time for incorporation into the Spring Economic Statement, which will be published later this month.

Comments

No comments

Log in or join to post a public comment.