Michael McGrath (Cork South Central, Fianna Fail)
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103. To ask the Minister for Finance the projected general deficit and the structural deficit in 2019 if the €900 million was spent as permitted solely under the expenditure benchmark and if the €500 million dedicated to the rainy day fund was instead spent; and if he will make a statement on the matter. [28610/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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The estimates prepared by the European Commission, in its Spring Forecast, and my Department, in the Stability Programme Update 2018, both project a structural deficit of 0.4 per cent of GDP for next year.

The impact of spending this €900 million is shown in Line ‘d’ in table 4 of the Summer Economic Statement. The deficit in 2019 would increase from 0.1 per cent of GDP to 0.4 per cent. As shown in table 4, the medium term budgetary objective is not achieved.

If an additional €500 million were to be spent this would, in the first instance, increase the deficit by another 0.2 per cent of GDP and have a corresponding impact on the structural position.

The total impact of spending the €900 million and the €500 million dedicated to the rainy day fund would increase the deficit from 0.1 per cent of GDP to a deficit of 0.6 per cent of GDP and increase the structural deficit from 0.4 per cent of GDP to 0.9 per cent of GDP.

The Government is committed to establishing the rainy day fund as a fiscal buffer in the event of a major shock to the economy.

As I set out in the 2018 Summer Economic Statement, the increases permitted under the fiscal rules represent money that we would have to borrow. Budgetary policy will be formulated on the basis of what is right for the economy at this stage in the cycle and not by rules that which would increase borrowing.