Thursday, 22 February 2018

Ceisteanna (49, 50)

Michael McGrath

Ceist:

49. Deputy Michael McGrath asked the Minister for Finance if the Exchequer borrowing requirement will be revised in each of the years 2018 to 2027 further to the announcement of the national development plan 2018 to 2027; the general debt developments (details supplied), in tabular form; the amount by which the Exchequer borrowing requirement will be revised in each of the years; and if he will make a statement on the matter. [9084/18]

Amharc ar fhreagra

Michael McGrath

Ceist:

50. Deputy Michael McGrath asked the Minister for Finance the net fiscal space for 2019, 2020 and 2021 accounting for the national development plan 2018 to 2027; and if he will make a statement on the matter. [9085/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 49 and 50 together.

There are two specific changes to the Exchequer Borrowing Requirement (EBR) as published in the Economic and Fiscal Outlook for Budget 2018. These forecasts cover the period to 2021.

The first relates to the passing of the Water Services Bill 2017 into law. As explained in the Economic and Fiscal Outlook, Chapter 7 'Budgetary Reform', Irish Water’s current and capital funding requirements for domestic water services will come from the Vote of the Department of Housing, Planning and Local Government. The Revised Estimates Volume for Public Services 2018 (REV) sets out the impacts in voted expenditure for 2018.

As these are simply reallocations between expenditure of a general government body and the Exchequer, this has no impact on the general government balance. The general government debt impact has already been included in the calculations.

Gross voted capital expenditure for 2018 in the National Development Plan (NDP) is consistent with the REV.

Secondly, the NDP announced four funds which will begin operating from 2019. These are the Rural, Urban, Innovation and Climate Action Funds.  

The funds will be partly covered by an unallocated capital reserve in the first instance, leaving an additional cost, which will both pre-commit unallocated fiscal space and worsen the EBR.

The EBR and general government debt developments table will be updated in the draft Stability Programme Update for 2018 to be published in mid-April.

The net nominal EBR increase resulting from the three funds is set out in the last row of the table below:

New Funds, € millions

2019

2020

2021

Rural                     

55

80

80

Urban                  

100

120

150

Innovation             

20

30

40

TOTAL                

175

230

270

Less Capital Reserve

-98

-136

-94

Net Increase

77

94

176

As the Climate Action Fund, set out in the table below, will be funded from the National Oil Reserves Agency (NORA) levy, it will have no impact on Voted Expenditure or the EBR.

€ millions

2019

2020

2021

Climate Action Fund

20

30

40

In calculating the impact on net fiscal space under the Expenditure Benchmark, it is assumed that both the Urban and Rural Funds will be recorded as gross fixed capital formation (i.e. subject to ‘capital smoothing’ over four years) and that the Innovation and Climate Action Funds will be treated as capital grants (i.e. not smoothed). A further assumption is that the funding from the capital reserve will offset the Rural and Urban Funds.

Should the operation of the funds change these assumptions then the figures below will need to be amended.

The cost, in fiscal space terms, of the four funds is therefore:

€ millions

2019

2020

2021

Fiscal Space Used

54

36

54

Updated calculations of fiscal space will be published in the Summer Economic Statement 2018 following the publication by the European Commission of the required inputs to the calculation in conjunction with its Spring Economic Forecast.