Dáil Éireann Debate, Tuesday - 30 January 2024
216. Deputy Neasa Hourigan asked the Minister for Finance if he will outline the Government's position during recent negotiations at EU level relating to fiscal rules around national debt and public spending; and if he will make a statement on the matter. [3817/24]
View answerPotential reforms to the EU’s fiscal rules have been mooted for many years but discussions accelerated following the publication of a Commission ‘orientations’ document in November 2022, followed by legislative proposals last April. Intensive discussions on the proposed reforms took place throughout last year in the various technical sub-committees of ECOFIN. Political agreement on the proposed reforms to the fiscal framework was reached by Finance Ministers at an extraordinary ECOFIN meeting the week before Christmas. Overall, I warmly welcome the political agreement at ECOFIN which will hopefully lead to a reform of Europe’s fiscal rules.
The proposed reforms will now go through a trilogue process between the European Commission, European Parliament and European Council before adoption in legislation. While the outcome of the Trilogue process cannot be pre-judged, a lot of work is still needed at a more granular level to decide how the new proposals will be operationalised, including in respect of the current European Semester cycle. Officials from my Department are actively engaged in these discussions.
Throughout discussions on the reforms to the EU fiscal framework, Ireland has been a clear supporter of the need for an effective set of fiscal rules to prevent the build-up of dangerous imbalances and unsustainable debt levels within the monetary union. Ireland also recognised the limitations of the old framework, including the central reliance on unobservable variables such as the structural balance. These proposed reforms, while retaining the Treaty reference values of a 3 per cent budget deficit and 60 per cent debt-to-GDP ratio, place a greater focus on country-specific, medium-term paths.
While Ireland supports the country-specific flexibility and medium-term focus of the proposed reforms, it is crucial that these are balanced by stronger enforcement and a renewed commitment to debt reduction. In this context, Ireland was a strong supporter of keeping the deficit-based EDP (excessive deficit procedure) unchanged in the revised framework. As a central enforcement tool of the rules, any deviation from this principle would undermine the careful balance at the heart of the proposals.
