Dáil Éireann Debate, Tuesday - 26 June 2018
114. Deputy Michael McGrath asked the Minister for Finance the minimum structural effort required under the fiscal rules to move towards the medium term objective in a year with a structural deficit of 0.9%; if Ireland is obliged under the European fiscal rules to move towards its medium term objective of a structural deficit of 0.5%; and if he will make a statement on the matter. [27700/18]
Amharc ar fhreagraA Member State in the preventive arm of the Stability and Growth Pact is legally required to be at, or making sufficient progress towards, its Medium Term budgetary Objective (MTO). Ireland's MTO is a structural deficit of 0.5 per cent of GDP.
The European Commission sets the required annual fiscal adjustment based on inter alia the cyclical position of the economy. In 'normal' economic times, a Member State not at its MTO should improve its structural deficit at a rate of 0.6 per cent of GDP per annum. A Member State cannot be required to over-achieve its MTO but is free to do so if it so chooses.
The Commission has projected a structural deficit in Ireland of 0.6 per cent of GDP for 2018. Accordingly, the Commission has proposed a Country Specific Recommendation that Ireland should achieve its MTO next year. My Department has projected a structural deficit of 0.9 per cent of GDP for this year; however, it is the Commission's figures that matter from a legal perspective.
As I set out in the 2018 Summer Economic Statement, budgetary policy will be set so as to reduce borrowing and steadily increase public expenditure underpinned by stable and predictable tax revenue.
