Written answers

Thursday, 24 November 2016

Department of Public Expenditure and Reform

Fiscal Policy

Photo of David CullinaneDavid Cullinane (Waterford, Sinn Fein)
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35. To ask the Minister for Public Expenditure and Reform his views on whether the Government's strict adherence to the fiscal rules is increasingly difficult to defend. [36575/16]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The Deputy will be aware that responsibility for the conduct of fiscal policy, including in terms of ensuring compliance with  the fiscal rules, is a matter for the Minister for Finance on behalf of the Government. 

The Deputy may wish to note, however, that compliance is not just an EU requirement under the Stability and Growth Pact (SGP) but is a consequence of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union that Ireland acceded to following a referendum in June 2012.  The fiscal rules are also part of the national legislative framework for budgetary policy set out under the Fiscal Responsibility Act 2012 approved by the Oireachtas.

Apart from the constitutional and legal position, the fiscal rules are designed to ensure fiscal discipline and - in so doing - to underpin sustainable economic growth.  Given our comparatively high debt level and the fact that we are a small and highly open economy operating in a global economic environment that can be turbulent, a key objective for budgetary policy is to achieve a balanced budget in structural or underlying terms.  In doing so we can continue to reduce our debt to much lower levels which will increase our capacity to withstand future shocks through the capacity to borrow at sustainable rates in international bond markets.  In this context I welcome the assessment recently published by the European Commission that - on an ex-ante basis - Ireland's Budget for 2017 is  broadly compliant with the fiscal rules for 2017.  This finding will help maintain the international investor and market confidence in the Irish economy that yields benefits in terms of foreign investment and our ability to borrow to meet our expenditure needs.

In conclusion, in order to illustrate the requirement for and the benefit of the fiscal rules, I would also draw the Deputy's attention to Figure 6 on page 16 Expenditure Report for 2017 published at

This shows that in the period from 2014 to 2017, gross voted expenditure will have grown by 9%. This is in comparison to three-year expenditure growth figures of between 26% and 57% that were experienced in the 1999 to 2008 period.

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