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European Stability Programmes

Dáil Éireann Debate, Thursday - 28 February 2013

Thursday, 28 February 2013

Questions (24)

Seamus Kirk

Question:

24. Deputy Seamus Kirk asked the Minister for Finance the implications for the budgetary process here following the agreement between the EU's Council of Ministers and the European Parliament in respect of the two pack regulations; and if he will make a statement on the matter. [10609/13]

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Written answers

The Irish Presidency of the Council of the EU has secured agreement, on behalf of euro area member countries, with the European Parliament and the European Commission, on two proposed regulations – the “two-pack”. One of the proposals is on the monitoring and assessment of draft budgetary plans and on ensuring the correction of excessive deficits. The other is on the strengthening of economic and budgetary surveillance and sets out explicit rules for enhanced surveillance of countries experiencing or threatened with financial difficulties. The agreement reached on February 20th will have to be approved by member countries and the European Parliament. The “two-pack” will be a significant and welcome enhancement of the euro area’s economic governance regime. It is, to a great extent, a natural extension of the measures contained in the ‘six-pack’ which was introduced on 13 December, 2011. The ‘six-pack’ - comprising five regulations and one directive - was designed to reform and strengthen fiscal surveillance under the Stability and Growth Pact and to introduce new macroeconomic surveillance.

The ‘two-pack’, which will be applicable to euro area member countries only, has several direct implications for the existing budgetary process. The key ones are: Member States will be required to produce a medium-term fiscal plan by the end of April each year; the draft budget for central government and the main parameters of the draft budgets for all the other sub-sectors of the general government must be published by the 15th of October each year; both the medium-term fiscal plan and the draft budget must be based on independent macroeconomic forecasts which are defined as forecasts produced or endorsed by independent bodies; and the budget for the central government must be adopted or fixed upon and published by the 31st of December each year.

The potential impact of these provisions on the budgetary timeline and the budgetary process are being considered and discussed by my Department and the Department of Public Expenditure and Reform. Other relevant Departments, such as the Department of Environment, Community and Local Government in relation to the local government sub-sector of general government, are also being consulted. When this process is completed in the near future, the Minister for Public Expenditure and I will be bring a Memorandum to Government setting out our proposals to meet the requirements I set out above.

In the context of the Medium-Term Fiscal Plan published in November 2012, reference was made to the two-pack proposals. The key point made in that publication, which still stands, is that much of the existing budgetary process, which normally is completed in the first week of December, will have to be finalised much earlier.

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