Pearse Doherty (Donegal, Sinn Fein)
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81. To ask the Minister for Finance if he will seek an exemption from the fiscal rules in the context of the economic impact of Brexit; and if he will make a statement on the matter. [16434/17]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, the fiscal rules to which Ireland is subject have direct application through a number of EU regulations.  Changes to these regulations would have to follow the normal EU approach starting with a proposal from the Commission before consideration by Member States and the European Parliament.

The issue of facilitating greater flexibility in the application of the fiscal rules has received significant focus at European level and framed discussions on the establishment of the structural and investment clauses, which were codified by the Commission in November 2015. Specifically these provisions allow for temporary deviations from the required structural budgetary adjustment, subject to strict conditions.

The harmonised methodology for calculating the economic cycle used in the implementation of the SGP remains an area with limitations within the fiscal rules. My Department has secured useful changes to this methodology over the years by consistently raising concerns and objections at European level. These changes have partially compensated for the reality that the harmonised methodology is not suitable for small open economies. My Department continues to advocate for improvements in the harmonised methodology and will continue to engage constructively on this and other relevant technical issues.

The fiscal rules are designed to promote budgetary discipline and underpin sustainable economic growth. While Ireland's economy is growing and debt is on a downward trajectory, the debt level is still comparably high and caution must be exercised due to the potential of rollover risk should interest rates increase. We are a small and very open economy in a world that has more risks than usual. Compliance with the fiscal rules underpins the Government's objective of maintaining sound public finances.

In addition, I announced, in Budget 2017, a lower debt target of 45 per cent of GDP that should be achieved in the mid-to-late 2020s. This will help to provide an additional fiscal 'shock absorber' capacity to the public finances to help deal with shocks to the economy, including the impact of Brexit. This will complement the contingency or 'rainy day' fund to be established following the achievement of a balanced budget in 2018 which will help provide a further counter-cyclical buffer.