Bernard Durkan (Kildare North, Fine Gael)
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51. To ask the Minister for Finance the extent to which Ireland's budgetary arrangements remain compliant with expenditure norms and guidelines applicable throughout the EU; if any particular issues have arisen which might require corrective attention; and if he will make a statement on the matter. [33992/16]

Michael Noonan (Limerick City, Fine Gael)
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Ireland, along with all EU Member States, is subject to fiscal rules under the Stability and Growth Pact (SGP) and the Fiscal Responsibility Act 2012.  

These rules are designed to promote budgetary discipline and underpin sustainable economic growth. Given our comparably high debt level and the fact that we are a small and very open economy in a world that has more risks than usual, it makes sense to get to a balanced budget in structural terms as planned in 2018. By reducing our debt to much lower levels, we will increase our capacity to withstand shocks by building our capacity to borrow. The fiscal rules underpin and facilitate achieving this objective.

As the harmonised methodology used to calculate the structural balance is not always suitable for a small open economy, our fiscal planning looks to the expenditure benchmark in the first instance. My Department's forecast of general government expenditure in 2016 will comfortably comply with the permitted expenditure limit under this rule.

My Department's forecasts of general government expenditure in Budget 2017 is some €200 million in excess of the permitted expenditure under the benchmark. This  is due to the projected increase in our EU Budget contribution arising from the large revision in our GDP.  However as we are forecast to make sufficient progress towards a balanced budget in structural terms in 2017 and the EU Budget contribution is a factor beyond our control, the Government has decided not to alter its fiscal plans in light of this one-off level shift. 

In line with European requirements, Ireland's draft budgetary plan for 2017 was submitted on the 17th of October 2016.  It is now undergoing assessment by the European Commission, which is expected to issue its opinion in mid-November.  The European Commission applies an overall assessment  encompassing performance against both the balanced budget rule and the expenditure benchmark when assessing compliance.  Accordingly, we expect that the European Commission will find that Ireland is broadly compliant with its obligation - indeed, I would point out that Ireland is not one of the seven countries that the European Commission has written to seeking clarification about or changes in their draft budgetary plans.