Written answers
Thursday, 28 June 2018
Department of Finance
Fiscal Data
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
101. To ask the Minister for Finance the impact on the State’s borrowing if the net fiscal space under the expenditure benchmark, including the €0.5 billion earmarked annually for the rainy day fund as spending, was committed to expenditure for the years 2019, 2020 and 2021. [28559/18]
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
102. To ask the Minister for Finance the impact on the State’s debt to GDP and debt to GNI star ratio, both in gross terms and as percentage, if the net fiscal space under the expenditure benchmark, including the €0.5 billion earmarked annually for the rainy day fund as spending, was committed to expenditure for the years 2019, 2020 and 2021. [28560/18]
Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I propose to take Questions Nos. 101 and 102 together.
The Government is committed to establishing the rainy day fund as a fiscal buffer in the event of a major shock to the economy. This will impact on the State’s borrowing by €500 million for each of the years 2019, 2020 and 2021 and is already captured in the State’s debt.
If this €500 million were to be spent this would increase the deficit by another 0.2 per cent of GDP and have a corresponding impact on the structural position. Furthermore as I set out in the SES, the focus of budgetary policy is to balance the books and reduce nominal debt.
The table shows the impact on debt if the net fiscal space were to be fully spent in 2019-2021.
| Debt projections as set in Stability Programme Update 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|
| Gross government debt as per SPU (€ millions) | 209.4 | 207.7 | 211.4 |
| Debt % GDP | 63.5% | 60.2% | 58.7% |
| Debt % GNI* | 93.7% | 88.9% | 86.8% |
| Debt projections if full utilisation of net fiscal space | 2019 | 2020 | 2021 |
| Gross government debt (€ billions) | 210.3 | 210.9 | 215.4 |
| Debt % GDP | 63.8% | 61.1% | 59.8% |
| Debt % GNI* | 94.1% | 90.3% | 88.5% |
The fiscal rules are currently unhelpful, a full and literal application of these rules would involve the adoption of policies that would mean more borrowing, which is not appropriate for where our economy is now.
We have one of the highest debt per capita ratios in the developed world. There is general recognition that sovereign borrowing costs are going to rise. So borrowing even more and adding to our debt pile is reckless - especially in view of the major risks to the economy at present, which I assume the Deputy is aware of. Such an irresponsible approach would also be repeating the mistakes of the past. The Government, on the other hand, will act in a responsible manner, to build our resilience and ensure steady, sustainable improvements in living standards.
No comments