Jim O'Keeffe
Ceist:38 Mr. J. O'Keeffe asked the Minister for Finance the expected Exchequer surplus for 1999; and his proposals for using this surplus. [16096/99]
Written Answers. - Exchequer Surplus.
As Deputies will be aware, my Department forecast an Exchequer surplus of £925 million for 1999 on budget day.
A number of specific factors have since had an impact on this target. The actual 1998 outturn for tax was £36 million higher than expected. This additional buoyancy is expected to carry into the 1999 Exchequer surplus. A total of £160 million has been received by the Exchequer for the Telecom Éireann employee share ownership programme which had not been included in the budget day arithmetic. This figure will have an impact on the Exchequer surplus. The proceeds of the Telecom Éireann flotation will increase the Exchequer surplus.
As usual, I will review the trend in revenue and expenditure over the first half of the year and will issue a detailed statement on the Exchequer returns at the end of the second quarter.
This year's Exchequer surplus will reduce further debt servicing costs by reducing the national debt. This will release resources for more productive purposes in future years, including improvement in public services, continued tax reform and infrastructural development. In this way it will help to offset the reduction in EU transfers which is in prospect – a reduction which will increase the net burden on the budget of a range of capital and current expenditure programmes.
Looking further ahead, there is need, also, to prepare for the less favourable budgetary position which will face us in the future when, demographic trends indicate, the proportion of older people in the population will increase and economic growth will slow.
The Government will also consider shortly the National Development Plan for the period 2000-06.
The stability and growth pact commits the Government to a budget which is close to balance or in surplus over the full economic cycle. As the Irish economy is now growing at exceptional rates, significant budget surpluses are entirely appropriate and in keeping with the objectives of the pact.