Tommy Broughan (Dublin Bay North, Independent)
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154. To ask the Minister for Finance the way in which the recent EU Commission decision on the fiscal rules objectives debt-to-GDP ratios will impact on his fiscal plans for 2017; and if he will make a statement on the matter. [39520/16]

Michael Noonan (Limerick City, Fine Gael)
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As I am not aware of any recent decisions from the EU Commission changing the debt to GDP objectives under the Stability and Growth Pact, I'm assuming the Deputy is referring to the recent draft Council recommendation on the economic policy of the euro area (COM(2016) 726 final) proposed by the European Commission.

For the euro area as a whole, the Commission suggests that in order to strengthen economic recovery, a fiscal expansion of up to 0.5% of GDP at the level of the euro area as a whole in 2017 is desirable.

I would point out that several Member States have questioned firstly, the legal basis for the Commission's recommendation and secondly, the appropriateness of such a policy. In this regard, the draft recommendation has not yet been formally adopted.

The recommendation notes the need for appropriate differentiation of fiscal effort depending on the Member State's position with regard to the requirements under the Stability and Growth Pact as set out below:

"(i) for Member States which are over-achieving their fiscal objectives, use their fiscal space to support domestic demand and quality investments, including cross-border ones, as part of the Investment Plan for Europe;

(ii) for Member States that need further fiscal adjustments under the preventive arm of the Pact, make sure to be broadly compliant with the requirements of the Stability and Growth Pact;

(iii) for Member States under the corrective arm, ensure a timely correction of their excessive deficits, including by providing fiscal buffers against unforeseen circumstances. Improve the composition of public finances by creating more room for tangible and intangible investment and ensure the effective functioning of national fiscal frameworks."

The recommendation stops short, however, of advocating specific loosening by respective Member States to support the 0.5% of euro area GDP looser fiscal stance.

Ireland falls into category (ii) and the euro area recommendation emphasises that is essential that Member States that need further fiscal adjustment under the preventive arm remain broadly compliant with the Stability and Growth Pact.

Government policy is to utilise the fiscal space available to Ireland under the rules and this is reflected in Budget 2017 and approved in the 16th November Commission Opinion.