Dara Calleary
Question:150. Deputy Dara Calleary asked the Minister for Finance his plans to review the use of the commonly agreed methodology in fiscal planning for budget 2018; and if he will make a statement on the matter. [5444/17]
View answerTuesday, 7 February 2017
Questions (150)
Written answers
Ensuring the plausibility of estimates of potential growth is a key priority given their significance in the application of the fiscal rules. As previously noted by both my own Department and the Fiscal Advisory Council, the harmonised methodology for estimating potential output is subject to limitations particularly when applied to Ireland. My Department continues to assess the merit of alternative models for estimating potential output for Ireland. Considerable work has been undertaken on this front to assess both the plausibility and, importantly, the stability of these alternative estimates. An outline of this work is set out in Box 1, page 24 of the Stability Programme Update 2016 (SPU), published in April. This work was further updated in the slides presented to the Budget Oversight Committee and to IFAC in October last year.
Notwithstanding the advance of alternative models, for the purposes of assessing the cyclical position of the economy in the context of fiscal monitoring, the harmonised methodology remains the relevant legally binding metric. In addition to developing alternative models, efforts continue to be undertaken at technical level in Europe to improve the performance of the harmonised methodology, to which Ireland continues to actively contribute.
In summary, Ireland's budgetary policy will be framed by the requirements of the Stability and Growth Pact and the harmonised methodology.
Questions Nos. 151 and 152 answered with Question No. 148.