Vol. 455 No. 2
12 Mr. McCreevy asked the Minister for Finance if he will make a statement on the recent remarks by the German Finance Minister, Mr. Theo Waigel, doubting Ireland's ability to meet the criteria for a single European currency, particularly in view of the recent cuts announced by him in the domestic economy. [11939/95]
20 Kathleen Lynch asked the Minister for Finance the direct contact, if any, he has had with the German Finance Minister, Mr. Theo Waigel, in view of the disagreement as to whether Ireland meets the criteria for inclusion in a single European currency; and if he will make a statement on the matter. [11878/95]
I propose to take Questions Nos. 12 and 20 together.
I take it the Deputies are referring to remarks made by the German Finance Minister at a press briefing following the 19 June ECOFIN meeting. That meeting considered European Commission opinions to the effect that all member states of the European Union except Germany, Luxembourg and Ireland have excessive deficits as defined in the Treaty on European Union.
The excessive deficit procedure is set out in Article 104c of the Treaty. Briefly, it provides that the European Commission will prepare an opinion where a member state does not fulfil one or both of the following requirements, namely that the ratio of the general Government deficit to gross domestic product, GDP, should not exceed 3 per cent or, if it does, that the ratio has declined substantially and continuously and reached a level close to 3 per cent, or the excess over 3 per cent is small, exceptional and temporary; The ratio of general Government debt to GDP should not exceed 60 per cent unless the ratio is sufficiently diminishing and approaching 60 per cent at a satisfactory pace.
Ireland's general Government deficit has been below 3 per cent of GDP every year since and including 1989. In addition, our debt-to-GDP ratio has been reduced from over 116 per cent in 1987 to 90 per cent in 1994 and will decline significantly again in 1995 to 85 per cent approximately. In view of these factors, the European Commission did not prepare an opinion on Ireland under the 1995 excessive deficit procedure because, as in 1994, the Commission rightly considered that Ireland does not have an excessive deficit.
I have not approached Dr. Waigel on foot of his remarks about Ireland's debt ratio: I pointed out after the 19 June ECOFIN meeting that the Treaty provisions are quite clear that a member state meets the debt criterion, even if its debt-to-GDP ratio is above 60 per cent, provided the ratio is sufficiently diminishing and approaching 60 per cent at a satisfactory pace, and it is equally clear that Ireland's debt ratio meets that test. It is the European Commission, and not the Government of any member state, which decides whether to prepare an opinion to the effect that a member state has an excessive deficit under the Treaty and the European Commission has clearly — and rightly — decided that Ireland has not. The German Government is fully aware both of the Commission's decisions on Ireland's case in 1994 and 1995 and of Ireland's view of the matter.
As regards the interim measures on public expenditure recently announced by the Government, these are aimed at ensuring that the Government commitment to limit the growth in current supply services expenditure to 2 per cent in real terms in 1996 is honoured. By committing itself to containing current supply expenditure, the Government is demonstrating its determination to ensure that Ireland will continue to meet the convergence criteria for movement to EU set out in the Treaty on European Union.
As this was the second occasion on which the German Finance Minister made such remarks will the Minister or his officials liaise with Dr. Waigel and his officials to establish why he made them? He obviously made them for some good reason and not just for the heck of it. Has the Minister or his officials received any indication from the German Finance Ministry as to why Dr. Waigel expressed these views?
I do not know the reason Dr. Waigel expressed these views. I understand that he is concerned about the position in Belgium, for example, where the general Government debt to GDP ratio is currently 123 per cent and rising. The ratio is rising in a number of the countries which hope to introduce a single currency in 1999 which would form the basis for EMU. I have taken note of what the Deputy said. Public controversy is not necessarily helpful. This is a matter for the Commission, and it has made its decision. It is not for individual member states to determine whether other member states meet the excessive deficit procedures.
Opposing views among the public are often helpful or at least bring people to the realisation that we are not all perfect. Given that as a result of the actions of successive Governments we are moving in the right direction regarding the Maastricht criteria and we are in a position to have a single European currency, will the Minister agree it is important to find out why the most important member financially of the EU thinks in this fashion? Perhaps Dr. Waigel is making these comments because he is sceptical about some of the Government's statistics or he is concerned about the Irish position when EU funds dry up at the end of this decade. The Minister should discuss these matters with his German counterpart.
I share the Deputy's view that outside comment, particularly of an objective and critical kind, is helpful and should not be rejected. I think Dr. Waigel is of the view that the debt-GDP ratio of 90 per cent last year and 85 per cent this year is too high having regard to the figure of 60 per cent — the critical phrase is "moving at a satisfactory pace towards 60 per cent". It appears that he is not necessarily satisfied at the pace, although he indicated in a press briefing that the performance in terms of reduction of the debt-GDP ratio between 1987 and this year has been very satisfactory. In terms of treaty compliance the Commission is charged under the treaty to determine whether member states meet the criteria, and it made that judgment not only this year but last year also.
