Written Answers. - Economic and Monetary Union.
Bernard J. Durkan
Question:
66
Mr. Durkan
asked the
Minister for Finance
the plans, if any, he has at EU level to ensure the success of EMU, with particular reference to Ireland's economic position in this context; and if he will make a statement on the matter.
[13696/98]
Brian O'Shea
Question:
76
Mr. O'Shea
asked the
Minister for Finance
the measures, if any, in place at European level to co-ordinate national budgetary strategies; the way in which he proposes to implement the ECOFIN decision in this regard; and if he will make a statement on the matter.
[13708/98]
I propose to take Questions Nos. 66 and 76 together.
Following the meeting of the ECOFIN Council on 1 May this year, it was announced that for the coming years, strong, sustained and non-inflationary growth will continue to be based in all member states on economic convergence. Moreover, sound and sustainable public finances are prior conditions for growth and higher employment. The Stability and Growth Pact provides the means for securing this objective and for increasing the scope in national budgets to deal with future challenges.
It was also announced that in accordance with the pact, that the council would begin to implement the regulation on "the strengthening of the surveillance of budgetary positions and the surveillance and co-ordination of economic policies", with effect from 1 July 1998.
In order to support the success of EMU I propose to adopt and to support at EU level budgetary and economic policies which help to sustain non-inflationary growth. In this regard the role of the stability and growth pact will be vital.
As the Deputies will be aware the pact requires all member states to adopt a budgetary position close to balance or in surplus in normal economic circumstances. This means that when the economy is growing strongly, as is currently the case in Ireland, the budget should be in surplus. This is necessary in order to ensure that even in the event of an economic slowdown the deficit can be kept below the 3 per cent of GDP reference value in the Maastricht Treaty. It will be recalled that, in the updated convergence programme published on budget day, the Government committed itself to run a budgetary surplus so long as the present good economic conditions prevailed.
The stability and growth pact also involves a system of multilateral surveillance whereby the Commission will have the role of assessing the budgetary plans set out in member states "stability programmes" for consistency with the overall objectives of the pact. The Commission will also monitor the progress being made by member states in delivering on their budgetary targets and where there is a deviation from the planned objectives will make recommendation for corrective action.
I consider that the mechanisms put in place by the pact will play a key role in both the co-ordination of budgetary policy across the EU and in the success of EMU itself. I would ask the House to note that it is my intention to prepare the first "stability programme" for Ireland covering the period 1999 to 2001 as part of the 1999 budget and to publish it as part of the budget day documentation.
