Michael McGrath (Cork South Central, Fianna Fail)
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153. To ask the Minister for Finance the restrictions on expenditure under the European fiscal rules once a member state is in the preventive arm of the fiscal rules, has met its medium term objective and has reached its target for debt to GDP; and if he will make a statement on the matter. [26619/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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The preventive arm of the Stability and Growth Pact endeavours to ensure that fiscal policy leads to sustainable public finances over the short and longer term.

A key component is that Member States attain a country-specific Medium Term budgetary Objective (MTO) which is set in structural terms. For Ireland this is currently a structural deficit of 0.5 per cent of GDP.

Assessment of compliance with the requirements of the preventive arm takes a two-pillar approach. Assessment of the structural balance, the first pillar, is complemented by an analysis of the growth rate of an expenditure aggregate net of discretionary revenue measures, i.e. the expenditure benchmark, which constitutes the second pillar. Compliance with the preventive arm is assessed through an overall assessment taking both elements into account.

Member States at their MTO must ensure that government expenditure grows at most in line with a medium-term rate of potential GDP growth, unless any excess growth is matched by discretionary revenue raising measures. The medium-term rate of potential growth ensures adherence to the MTO over time.

If a Member State has overachieved its MTO then any deviation on the expenditure benchmark shall not be considered significant, taking into account the possibility that significant revenue windfalls and the budgetary plans laid out in the Stability Programme do not jeopardise the MTO over the programme period.