Dáil Éireann Debate, Tuesday - 26 June 2018
113. Deputy Michael McGrath asked the Minister for Finance the amount by which Ireland would miss its MTO target in 2019 if the €500 million dedicated to the rainy day fund were to be spent in 2019; and if he will make a statement on the matter. [27699/18]
Amharc ar fhreagraThe estimates prepared by the European Commission, in its Spring Forecast, and my Department, in the Stability Programme Update 2018, both project a structural deficit of 0.4 per cent of GDP for next year.
If an additional €500 million were to be spent this would, in the first instance, increase the deficit, and have a corresponding impact on the structural position. On the assumption that all other variables are unchanged the resulting structural deficit would be 0.6 per cent of GDP in 2019.
Ceteris paribus the MTO would, therefore, not be achieved next year.
The Government is committed to establishing the Rainy Day Fund as a fiscal buffer in the event of a major shock to the economy.
As I set out in the 2018 Summer Economic Statement, the increases permitted under the fiscal rules represent money that we would have to borrow. Budgetary policy will be formulated on the basis of what is right for the economy at this stage in the cycle and not by rules that would increase borrowing.
