I propose to take Questions Nos. 41, 65 and 70 together.
As part of the 2016 Summer Economic Statement, the Government announced its intention to establish a contingency reserve/rainy day fund with effect from 2019. The crisis years clearly demonstrated that volatility in the economic cycle can be much more pronounced due to the open nature of the Irish economy. As such, the rainy day fund would provide a prudent counter-cyclical buffer, with annual transfers from the Exchequer to the rainy day fund expected following the achievement of the Medium Term Budgetary Objective, projected to be next year.
The rainy day fund is currently under review and further information will be provided in the Summer Economic Statement (SES) to be published in July.
Additionally, a revised lower debt target of 45 per cent of GDP was announced in Budget 2017, intended to help to provide an additional fiscal 'shock absorber' capacity to the public finances to help deal with future economic headwinds, including the impact of Brexit. Again, this target is under review and updated information will be included in the SES.
My Department published a report in June entitled the "Annual Report on Public Debt in Ireland”, and included an illustrative scenario for the debt path over the medium term. On the basis of reasonable assumptions, it is projected that the debt-to-GDP ratio of 60 per cent would be achieved in 2022, 55 per cent in 2023/2024 and 45 per cent in 2026. The analysis also suggests that, based on continued compliance with the fiscal rules, growth in the nominal GDP is expected to do the heavy lifting in reducing the debt-to-GDP ratio in the coming years.
This projected timing does not factor in proceeds from the sale of banking assets, which will be used to lower debt and thus could bring forward the achievement of the above ratios.
The report also contains an analysis of the debt path under different economic and other scenarios.