Dáil Éireann Debate, Thursday - 16 July 2020
13. Deputy Éamon Ó Cuív asked the Minister for Finance if an indication has been received from the EU based on the Stability and Growth pact report forwarded to the EU in April 2020 regarding the likely borrowing that will be permitted to Ireland in 2021 to reboot the economy after the Covid-19 crisis; if the EU has not given this indication, when it is likely to do so; and if he will make a statement on the matter. [15669/20]
Amharc ar fhreagraAs outlined in the Stability Programme Update, published by my Department in April, the so-called ‘general escape clause’ of the Stability and Growth Pact was activated for the first time in March of this year. The activation of the clause temporarily suspends the normal fiscal requirements applying to Member States under the preventive arm of the Pact in 2020. This decision was taken to allow Member States to take all necessary measures in response to COVID-19.
Along with suspending the fiscal adjustments recommended by the European Council for 2020, the general escape clause also underpinned the Country-Specific Recommendation issued in respect of budgetary policy for 2021. Specifically, in contrast to the regular procedures under the Stability and Growth Pact, no quantitative fiscal requirement or target was prescribed for Member States in relation to 2021. Instead, Member States are recommended to take all necessary measures to effectively address the pandemic, sustain the economy and support the ensuing recovery. Therefore, the EU's fiscal rules do not currently seek to place a limit on Ireland's borrowing in 2021.
More generally, it is important to stress that Ireland entered this crisis from a position of strength, with effective full employment conditions and improving debt dynamics. The composition of our debt also remains favourable with long maturities and strong credit ratings. The crisis has not constrained Ireland’s ability to borrow and the NTMA has been able to regularly tap bond markets at low rates. This was further evidenced last week when Ireland raised €1.5 billion on the market, with negative yields applying to a large proportion of this.
