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Dáil Éireann díospóireacht -
Tuesday, 12 Nov 1991

Vol. 412 No. 5

Written Answers. - Debt/GNP Ratio.

Mervyn Taylor

Ceist:

57 Mr. Taylor asked the Minister for Finance the estimated debt/GNP ratio for the years 1992 and 1993 assuming the following growth rates in the economy, each year on the basis of neutral budgets (a) 0 per cent (b) 2 per cent (c) 3 per cent and (d) 4 per cent; and if he will make a statement on the matter.

The debt/GNP ratio is a function of many possible variables in addition to the growth rate of the economy. For example, the level of borrowing, interest and exchange rates and redemptions would all affect the ratio.

It is not clear, either, what the Deputy has in mind when he calls for the estimated ratio in 1992 and 1993 to be calculated on the basis of "neutral budgets", nor how the specified growth rates are to be translated into budgetary terms. Tax revenue buoyancy is dependent on such factors as consumption patterns which can vary very significantly for any given growth rate. Similarly, the shift in migration patterns reflected in the live register, and therfore in social welfare spending this year, bears no relationship to the domestic economic performance.
It follows that any prediction of the evolution of the debt/GNP ratio based solely on growth rates would be likely to be misleading, and would not justify the allocation of Departmental resources that would be needed to prepare it.
The medium-term target, as already announced, is to reduce the debt/GNP ratio towards 100 per cent by 1993. I can assure the Deputy that despite the difficult budgetary situation, the debt/GNP ratio is set to fall yet again this year, and that the Government are committed to ensuring continued progress in 1992 towards this essential objective.
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