Dáil Éireann Debate, Tuesday - 20 November 2012
199. Deputy Pearse Doherty asked the Minister for Finance if discussions have taken place between him and his Department and the finance programme troika regarding the extension to the target year by which the State gets its deficit below 3%; and if he will make a statement on the matter. [51149/12]
View answerAs the Deputy will be aware, review missions to Ireland by the three external partners - the EU, the ECB and the IMF (the Troika) - take place each quarter as part of the regular review process of our EU-IMF programme. The eighth review mission took place from Tuesday, 16 October to Thursday, 25 October last. In line with each of the previous quarterly reviews, Ireland has met all of the commitments and our continued strong programme implementation has been recognised by the Troika. My colleague, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and I met the EU-IMF delegation during the recent quarterly review of the EU-IMF Programme of Financial Support for Ireland. These meetings were also attended by senior officials from both Departments. A wide range of topics was covered at these meetings, including financial reforms, structural reforms, economic developments and the progress of the Programme. The fiscal consolidation path, in terms of extending the period, was not discussed.
We have agreed a timeline for correction of the deficit by 2015 with the European authorities. The fiscal consolidation path is set out in the Council Implementing Decision 2011/77/EU of 7 December 2010, and any change to this would require ECOFIN Council of Ministers agreement. In addition, the Deputy should recall that we previously secured an extension of this timeline from 2014 to 2015. Any further extension of the fiscal consolidation timeframe would most likely mean a higher peak debt ratio and more of the State’s resources going towards debt servicing costs. Both the debt and debt servicing costs are at a very high level already. It is important they are stabilised and then reduced as quickly as possible. The State entered into excessive deficit in 2008. Based on the current plan, the State will be in excessive deficit for seven years, coming out of it only in 2015. This is a long period of time to be running deficits in excess of 3% of GDP. The Government is of the view that a 2015 deadline for correcting the deficit strikes the right balance between allowing the economic recovery to take hold but at the same time restoring sustainability to the public finances in a phased, timely manner. The current consolidation strategy is delivering on its main aim of reducing the deficit and Government is of the view that it would not be wise to change course at this point.
