Dáil Éireann Debate, Thursday - 22 June 2023
217. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he and his Department have identified the degree to which unforeseen budgetary surpluses need to be set against Government borrowing in order to ensure adequate provision for the future; and if he will make a statement on the matter. [30446/23]
View answerAt the end of last year public indebtedness stood at €225 billion or 83 per cent of GNI*. Public debt this year is projected at €224 billion, almost 80 per cent of national income. A stock of public debt on this scale can be managed, but only if the appropriate policy stance is in place.
That is why this Government is committed to sustainable fiscal policies. As set out in April’s Stability Programme Update (SPU), public debt is projected to fall further to €215 billion by 2026, the equivalent of 65.4 per cent of Modified Gross National Income or GNI*. This is more than €20 billion below the year-end figure for 2021, and represents a significant reduction in the stock of national debt and a further improvement in the debt ratio.
Last year a General Government Surplus of approximately €8 billion was recorded. Going forward, the general government surplus is estimated at €10 billion this year and €16.2 billion in 2024.
However, last year’s surplus was largely driven by corporation tax receipts. The corporation tax revenue stream has effectively doubled since just before the pandemic with analysis by my Department suggesting that a significant portion of this increase is windfall in nature. My Department estimates that when windfall receipts are stripped out, the underlying general government balance is not projected to go into surplus until next year. The level shift in corporate tax receipts, occurring over a very short timeframe, raises legitimate questions regarding the sustainability of this revenue steam.
In this context, my Department recently published a scoping paper outlining a range of illustrative options to help to insulate the public finances from the risks associated with an overreliance on potentially transitory windfall corporation tax receipts, while also putting money aside to contribute to future ageing and other structural costs. The paper also discusses different approaches to using the windfall receipts including using a portion to pay down debt and for additional, targeted capital investment.
Work on proposals for a long-term savings vehicle, paying down debt and targeted capital investment is ongoing and will take into account the analysis contained in the Department’s paper.
