First 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, simulation based assessment 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 our 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 projected deficits of €8.9bn and €5.3bn for 2014 and 2015, respectively.
While this agreement is a significant step forward in restoring sustainability to our public finances, the 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 requirement under the Excessive Deficit Procedure (EDP) to bring our deficit to under 3% of GDP by 2015, 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.