Gerald Nash (Louth, Labour)
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473.To ask the Minister for Public Expenditure and Reform his views on an issue raised by the acting chief economist of IFAC (details supplied) regarding the discrepancy between the capital expenditure outlined in the most recently published Stability Programme Update and summer economic statement, respectively; his plans to address the issue as outlined by IFAC; and if he will make a statement on the matter. [31511/24]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Summer Economic Statement is an important milestone in the annual budgetary process, it sets out the broad parameters for the forthcoming annual Budget in terms of current and capital, giving the wider macroeconomic context within which the parameters are set. It sets the basis for which my Department negotiates the overall allocations to each line Department and on that basis is vital for other Ministers to see the constraints within which they must plan to deliver and improve their services.

Since the Medium Term Expenditure Strategy was published in 2021, the Covid-19 pandemic, the war in Ukraine, and high levels of inflation have required a responsive approach to the management of the public expenditure. Government’s response to this balanced the need to address expenditure priorities against the risk of overheating with an approach that delivered:

- sustainable and continued investment in public services and infrastructure;

- targeted support to protect the most vulnerable, including through permanent and temporary cost of living measures.

Overall the approach has been successful in not fuelling inflationary pressures. With inflation back at a projected 2.1 per cent for this year, the expenditure strategy for 2025 is targeted at addressing the challenges still arising from the high levels of inflation experienced across 2022 and 2023. The challenges are compounded by the unwinding of temporary measures, the increased demands on public services, and the need for further improvements in infrastructure. The lag effect in relation to inflation and the increased demands for public services are reflected in the existing level of service (ELS) requirement for 2025.

In 2025 total voted expenditure is set to grow by €6.9 billion or 6.9%. This increase is made up of a €5.5 billion or 6.4% uplift in total voted current expenditure and a €1.4 billion or 10.6% uplift in total voted capital expenditure.

The NDP is central to delivering the vital infrastructure needed to support our future economic and social progress. Capital expenditure has been prioritised in recent years, as shown by the additional €2.25 billion (over 2024 to 2026) agreed last year, all of which has been allocated to the NDP. For 2025, overall capital investment will increase by €1.4 billion (or 10.6%) to €14.5 billion in 2025. The capital expenditure amount of €14.5 billion for 2025 in the SES is as set out in the Stability Programme Update published in April.

My Department with the Department of Finance will continue to engage with IFAC on a regular basis and provide technical explanations or otherwise required through formal correspondence with IFAC as we typically do.