Dáil Éireann Debate, Tuesday - 31 May 2016
235. Deputy Pearse Doherty asked the Minister for Finance the minimum percentage improvement that was required to the structural balance for 2015 under the European Union fiscal rules; and the outturn of the 2015 percentage improvement to the structural balance. [12538/16]
View answer236. Deputy Pearse Doherty asked the Minister for Finance the minimum percentage improvement required to the structural balance for 2016 under the European Union fiscal rules; and the percentage improvement he is forecasting to the structural balance for 2016. [12539/16]
View answer237. Deputy Pearse Doherty asked the Minister for Finance the minimum percentage improvement required to the structural balance for 2017 under the European Union fiscal rules; and the percentage improvement he is forecasting to the structural balance for 2017. [12540/16]
View answerI propose to take Questions Nos. 235 to 237, inclusive, together.
In accordance with the Council Recommendation, dated 7 December 2010, as part of an Excessive Deficit Procedure (EDP), Ireland was required to reduce its headline general government deficit to at least 2.9% by 2015. To ensure sufficient progress towards this objective, annual targets were set for the headline deficit between 2010 and 2015. The Council Recommendation did not specify annual targets for the structural balance for Ireland, although a cumulative structural improvement over 2011 to 2015 was required. The 2016 Stability Programme Update, published 27 April, included an estimate that the structural balance improved by 0.9 percentage points (pp) of GDP in 2015. Outturn data show that Ireland has reduced its headline deficit to 2.3 % of GDP in 2015 (or 1.3 % of GDP on an underlying basis). On this basis, the European Commission has issued a recommendation for a Council Decision to abrogate Ireland's EDP procedure.
Following our exit from the EDP, Ireland will be subject to the preventive arm of the Stability and Growth Pact. Under the preventive arm, the required minimum pace of structural budgetary adjustment is predetermined on the basis of cyclical conditions in Member States. In both 2016 and 2017, Ireland is required to deliver an improvement of 0.6pp in the structural balance of GDP, as required under 'normal' cyclical conditions. These requirements have been set or 'frozen' on the basis of European Commission estimates of the output gap for these years outlined its Spring forecast exercise conducted in 2015 and 2016 respectively.
On an ex-ante basis, for 2016, my Department projects an improvement in the structural balance of 0.4pp of GDP. While this is below the required improvement, the deviation of 0.2pp of GDP is not considered significant in the fiscal framework. Furthermore, on the basis of its analysis contained in its assessment of our Stability Programme Update, the Commission deems Ireland to be compliant in 2016 on an ex-ante basis with the second pillar of assessment considered under the preventive arm the expenditure benchmark. On a no-policy change basis, as set out in the Stability Programme Update, my Department projects a structural budgetary improvement of 1.2 per cent of GDP for 2017.
