Imelda Munster
Ceist:46. Deputy Imelda Munster asked the Minister for Finance if Ireland will be in full compliance with the fiscal rules for 2016; and if he will make a statement on the matter. [27530/16]
Amharc ar fhreagraThursday, 29 September 2016
Ceisteanna (46)
Freagraí scríofa
The fiscal rules to which Ireland is subject, including as part of the Stability and Growth Pact (SGP), are designed to ensure stable public finances that underpin sustainable economic growth. The Government's medium term fiscal strategy is to 'balance the books', which is defined in structural terms as a deficit of 0.5 per cent of GDP. This is Ireland's medium term objective or MTO and it should be achieved in 2018.
The European Commission makes a recommendation to each Member State on the appropriate improvement required on an annual basis in the structural balance to reach its MTO. This analysis takes account of the debt-to-GDP ratio, the size and sign of the output gap and whether the economy is growing faster than potential GDP growth. Currently, Ireland is required to improve its structural balance by 0.6 per cent of GDP per annum. My Department's latest forecasts, as published in the Summer Economic Statement, indicate that Ireland will achieve a structural balance improvement of 0.5 percentage points this year. While this preliminary ex ante estimate falls slightly short of the required adjustment, it is not considered a significant deviation under the SGP framework. Furthermore, on the basis of this outlook, Ireland remains on track to achieve its MTO in 2018.
The purpose of the expenditure benchmark is to keep expenditure growth in line with the trend growth rate of the economy after taking account of discretionary revenue measures. It is designed to ensure that the level of spending is sustainable and can continue to be supported by the economy. Thanks in part to Eurostat's decision to classify an AIB banking transaction in 2015 as general government expenditure, my Department's preliminary ex ante estimates suggest Ireland will be compliant with the benchmark in 2016.
Assessment of compliance with the preventive arm of the SGP is undertaken by the European Commission and is based on overall assessment, taking account of both pillars (the expenditure benchmark and the balanced budget rule). As part of the Budget 2017 process, there will be a detailed re-assessment of both pillars in respect of both 2016 and 2017. The final assessment of compliance with the rules in 2016 on an ex post basis will take place once data outturns are confirmed in the context of the European Commission's Spring 2017 forecast.