Dáil Éireann Debate, Thursday - 21 February 2013
77. Deputy Michael McGrath asked the Minister for Finance if it is his intention, provided all other economic indicators remain in line with the projections made in Budget 2013, to use the circa €1 billion improvement in the general Government balance as a result of the deal on the promissory notes to reduce the planned €3.1 billion adjustment in budget 2014; and if he will make a statement on the matter. [9477/13]
View answerFirst of all it is important to note that some aspects of the promissory note deal are yet to be finalised. For example, the liquidator is in the process of overseeing a valuation and sales process for the assets of IBRC, while the final payments made under the ELG Scheme have not yet been determined. Nevertheless, as referred to by the Deputy, simulations ran by my Department estimate that the General Government deficit will improve by approximately €1 billion per annum over the coming years, which will bring us €1bn closer to attaining out 3% deficit target by 2015. This means that the expenditure reductions and tax increases will be of the order of €1 billion less to meet the 3% deficit ( there will be negligible impact in 2013 as a result of the payout under ELG). However, this has to be seen in the light of the most recently published General Government deficits of €8.9bn and €5.3bn in 2014 and 2015.
While this agreement is a significant step forward in restoring sustainability to our public finances, this Government is well aware that there remains a considerable gap between what we get in revenue and what we spend. This situation is not sustainable over the longer term. In addition to the requirements to bring our deficit to under 3% of GDP by 2015 as per the EDP, it makes sense that we bring balance back to the public finances and stabilise and reduce our debt burden.
As we are less than two months into the year, I will not be drawn into speculation on the composition of the next Budget and the impact that this deal will have on it. There are a lot of other moving parts to be considered such as economic growth, tax take and expenditure performance. All of the above, including the impact of the promissory note deal, will form the basis of Government decisions regarding the Budget.
