Pearse Doherty (Donegal, Sinn Fein)
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143. To ask the Minister for Finance his views on whether further measures will be required in 2017 in order to comply with the provisions of the Stability and Growth Pact in view of an EU report (details supplied); the measures which may be implemented in 2017 as a result; and if he will make a statement on the matter. [25398/17]

Michael Noonan (Limerick City, Fine Gael)
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The European Commission published its recommendation for a Council Recommendation on the 2017 National Reform Programme of Ireland and delivering a Council opinion on the 2017 Stability Programme of Ireland on the 22 May 2017.  My officials are currently examining the recommendation and the Commission staff's assessment of Ireland's 2017 Stability Programme Update.

Recital eight of the Commission's recommendation calls for Ireland ‘to achieve an annual fiscal adjustment of 0.6% of GDP towards the medium-term budgetary objective in 2017.  Based on the Commission's 2017 spring forecast, there is a risk of a significant deviation from the recommended fiscal adjustment over 2016 and 2017 taken together’.

The EU Commission’s own forecasts estimate that the required 0.6% of GDP improvement in Ireland’s structured balance will be delivered in 2017 and that the average deviation for 2016 and 2017 taken together is 0.1% of GDP.  Accordingly, the reference to a risk above would appear to refer to the expenditure benchmark.

The Deputy should be aware that a methodological change was agreed in late 2016 to the way compliance with the expenditure benchmark will be assessed going forward.  In future,  the Commission will take one-offs systematically into account in the assessment process.  However in my view, it cannot be retrospectively applied to 2016 expenditure benchmark assessment or to the 2016/2017 average.  Indeed, the 2017 version of the Vade Mecum states that “in order to preserve Member States’ legitimate expectations, compliance with already adopted Council recommendations will continue to be assessed on the basis of methodologies described in the 2016 version of the Vade Mecum."

Nonetheless, the Commission appears to have retrospectively applied this change in its calculations and this would appear to be the basis of its statement.  My officials are taking this issue up bilaterally with the European Commission.