In the light of the complexities of European fiscal rules, the Irish Fiscal Advisory Council has adopted a principles-based approach to its assessment of compliance. While it is based on the EU framework, the approach incorporates a number of adjustments to make it more relevant in an Irish context.
The council has assessed that the medium-term budgetary objective, MTO, was achieved in 2018. Furthermore, the achievement of the MTO was not due to windfall revenues. Once the MTO is achieved, the expenditure benchmark does not formally apply.
The council's report states the net expenditure growth rate limit for 2018 was exceeded by one percentage point. The report notes that "compliant" and "significant deviation" were not applicable, reflecting the achievement of the MTO.
The European Commission is responsible for assessing compliance with EU fiscal rules and its ex post assessment of 2018 judged that the breach of the expenditure benchmark was not significant. Put another way, the Commission's overall assessment of 2018 is one of broad compliance.
Assessment of 2019 is currently on an ex ante basis. The council has stated net expenditure growth is forecast to be below the expenditure benchmark limit. This is in line with the Commission's assessment of the stability programme update, SPU, that the expenditure benchmark has been complied with. The Deputy might be aware that there is a debate on the operation of fiscal rules developing between the European Commission, Eurogroup and ECOFIN. We had an informal ministerial meeting a number of weeks ago, at which a presentation was made by the European Fiscal Board on the operation of fiscal rules. It raised a number of issues, particularly about the rules' complexity and whether changes to them could play a role in supporting future investment in renewable technologies.