Dáil Éireann Debate, Thursday - 21 March 2013
10. Deputy Thomas P. Broughan asked the Minister for Finance if he will outline the possible implications for Budget 2014 of the promissory note deal and any future deal on banking debt; and if he will make a statement on the matter. [13939/13]
View answerAs I have stated previously, 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 to be made under the ELG Scheme have not yet been determined. Nevertheless, 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 €1 billion closer to attaining our 3% deficit target by 2015. However, this has to be seen in the light of the estimated General Government deficits of €8.9bn and €5.3bn in 2014 and 2015 respectively, as per Budget 2013.
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.
At this early stage of 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.
In terms of a potential bank deal, Ireland’s position on this is well known. It is essential that the measures introduced for direct banking recapitalisation achieve the object of breaking the link between the sovereign and the banks.
Ireland is now in the final year of its programme. It is important that the ESM’s banking recapitalisation tool does not rule out a retroactive deal for Ireland in respect of its viable banks. This will be an essential element in helping us to regain continuous market access and help improve the sustainability of our well-performing adjustment programme.
This message is being conveyed to my colleagues at ECOFIN where dialogue is ongoing but it is far too early to speculate the form and magnitude of any potential deal.
