John Gormley
Question:80 Mr. Gormley asked the Minister for Finance his views on the recently announced changes to the Stability and Growth Pact; and the extent to which this will impinge on Government spending in the coming years. [9751/03]
Written Answers - Stability and Growth Pact.
In its programme, the Government reaffirmed that the Stability and Growth Pact provides the overall framework for Ireland's budgetary policy.
The essential message of the Stability and Growth Pact is that through fiscal prudence we can ensure economic growth and fiscal stability. At the recent spring European Council meeting in Brussels in March, Heads of State and Government approved a report from the ECOFIN Council on strengthening co-ordination of budgetary policies. The report stated that there is no need to change either the treaty or the stability and growth pact, nor to introduce new budgetary objectives or rules. However, the report made some recommendations regarding the effective application of the stability and growth pact. The main recommendations in this regard included the following: first, that the economic cycle should be taken into account when assessing compliance; second, countries with deficits exceeding the close to balance or surplus requirement must improve their budgetary position by an annual minimum of 0.5% of GDP; third, member states should avoid pro-cyclical policies; and fourth, greater attention will be paid to analysing the long-term sustainablility of public finances and greater emphasis will be placed on reducing debt levels and the quality of public finances.
The discipline of the Stability and Growth Pact has been good for Europe and for Ireland. We are not following these policies simply because of EU rules, but because they make good sense in themselves.
Ireland's programme of investment and expenditure to support growth, employment and social development will continue to be set within the framework of the Stability and Growth Pact.