Pearse Doherty
Question:160. Deputy Pearse Doherty asked the Minister for Finance the revised net fiscal space figures in view of the National Development Plan 2019 to 2023. [9367/18]
View answerTuesday, 27 February 2018
Questions (160)
Written answers
Updated calculations of fiscal space will be published in the Summer Economic Statement 2018 that will be prepared following the publication by the European Commission of the required inputs to the calculation in conjunction with its Spring Economic Forecast. These forecasts will take account of all policy changes announced since Budget 2018, including the impact of the National Development Plan (NDP).
However, the specific impact of the NDP out to 2021 on the Exchequer Borrowing Requirement (EBR) and on fiscal space, based on certain assumptions, is set out in the table.
The NDP announced four new funds that will begin operating from 2019. These are the Rural, Urban, Innovation and Climate Action Funds. The funds will be partly covered by an unallocated capital reserve in the first instance, leaving an additional cost, which will both pre-commit unallocated fiscal space and worsen the EBR.
The net nominal EBR increase resulting from the three funds is set out in the last row of the following table:
|
New Funds, € millions |
2019 |
2020 |
2021 |
|
Rural |
55 |
80 |
80 |
|
Urban |
100 |
120 |
150 |
|
Innovation |
20 |
30 |
40 |
|
TOTAL |
175 |
230 |
270 |
|
Less Capital Reserve |
-98 |
-136 |
-94 |
|
Net Increase |
77 |
94 |
176 |
As the Climate Action Fund, set out in the table below, will be funded from the National Oil Reserves Agency (NORA) levy, it will have no impact on Voted Expenditure or the EBR.
|
€ millions |
2019 |
2020 |
2021 |
|
Climate Action Fund |
20 |
30 |
40 |
In calculating the impact on net fiscal space under the Expenditure Benchmark, it is assumed that both the Urban and Rural Funds will be recorded as gross fixed capital formation (i.e. subject to ‘capital smoothing’ over four years) and that the Innovation and Climate Action Funds will be treated as capital grants (i.e. not smoothed). A further assumption is that the funding from the capital reserve will offset the Rural and Urban Funds.
Should the operation of the funds change these assumptions then the figures below will need to be amended.
The cost, in fiscal space terms, of the four funds is therefore:
|
€ millions |
2019 |
2020 |
2021 |
|
Fiscal Space Used |
54 |
36 |
54 |