Dáil Éireann Debate, Wednesday - 5 July 2017
27. Deputy Dara Calleary asked the Minister for Finance his plans to carry out a fiscal stress test as has been done in other jurisdictions such as the UK, with particular attention to the fiscal risks that may be faced; the potential contingent liabilities that exist for the fiscal position; and if he will make a statement on the matter. [26203/17]
View answerMy Department carries out and publishes the results of fiscal stress tests on a frequent basis.
The annual Stability Programme Update (SPU) submitted to the European Commission each April complies with European requirements, including the Code of Conduct agreed between the Commission and the Member States. EU requirements are that economic and budgetary forecasts use the most up-to-date information and that budgetary planning is based on the most likely macro-fiscal scenario or on a more prudent basis. Furthermore, the macroeconomic forecasts have to be assessed and endorsed by the Irish Fiscal Advisory Council.
The risk and sensitivity analysis chapter of both the SPU and Budget publications assesses the sensitivity of key fiscal data to changes in interest rates and world output. These data include the general government balance, debt, exports, wages, unemployment rate and GDP.
Furthermore, the SPU also sets out data on the ‘Long-term sustainability of the Public Finances’.
Data on contingent liabilities are also published. As a contingent liability arises in a situation where past or current actions create the risk of a future call on the Exchequer, the nominal level of contingent liabilities are independent of changes to world output or interest rates. As a share of GDP, contingent liabilities have trended downwards across all categories in recent years, with the next update due in Budget 2018.
In addition, my Department publishes an Annual Debt Report showing compliance with the EU debt rule out to 2025. This publication also contains a debt sustainability analysis showing how the debt path would evolve under a range of macro-fiscal scenarios. The document also outlines a range of additional variables monitored by my Department from a debt sustainability perspective.
