The deficit target of 5.1% of GDP to which the Deputy refers is the maximum general government deficit in 2014 that the Government is required to deliver under the excessive deficit procedure in the Stability and Growth Pact. This is part of an agreed consolidation path that Ireland will follow to restore the public finances to sustainability.
The European Commission, the International Monetary Fund, the European Central Bank and most economic commentators have acknowledged that Ireland has met all of its targets to date and that substantial progress has been made in setting the public finances and the economy back on the road to good health. However, while it is right to recognise progress, it should be remembered that, regardless of commitments we have made to our international partners, these deficits represent the annual shortfall between what the State collects in revenue and what it spends. Every year in which there is a deficit, the Government must borrow money, adding to the quantum of outstanding debt. This borrowing attracts additional interest and, in turn, this adds to the national debt. Interest payments divert scarce resources from areas where they are badly needed. It must be evident to everyone that this situation cannot persist in the longer term and that every effort must be made to alleviate this burden on the people. This is the primary reason the Government is taking action to close the deficit, but in a way that seeks to find a balance between the need to tackle the deficit and the need to promote growth in the economy.
Last April in the stability programme update, I set out, on a purely technical basis, that consolidation of €3.1 billion would result in a general government deficit of 4.3% of GDP in 2014. That estimate was based on the latest available data at the time. Since then, we have received more up-to-date information, most recently the quarterly national accounts from the Central Statistics Office and the end-of-September Exchequer returns, which were published yesterday. My officials are analysing these data for incorporation into the budgetary forecasts. This work is well under way and I will not be drawn into speculation on the composition of the budget at this time. However, the Deputy may rest assured that budget 2014 will include the required combination of revenue-raising and expenditure-reduction measures to ensure Ireland continues on the road to repairing its public finances while providing an environment suitable to allow economic recovery to continue. This will be done in such a way that the burden is spread as equitably as possible.