Update: Reducing the Debt to GDP Ratio 4th July 2014

4th July 2014 - Bernard Durkan TD

QUESTION NO: 50

DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)

by Deputy Bernard J. Durkan

for WRITTEN ANSWER on 03/07/2014

To ask the Minister for Finance the extent to which he expects to be in a position to use economic growth as a means of reducing the debt to GDP ratio in the context of the forthcoming budget having particular regard to the criteria set out by the Troika and the equally pressing need for some ameliorating measures to facilitate economic growth; and if he will make a statement on the matter.

REPLY.

The recent forecast by my Department, contained in the Stability Programme Update, shows the general government debt to GDP ratio reducing from 123.7% in 2013 to 107.2% in 2018.

In the short term, a reduction in the cash balances held by the State will assist in the reduction of the debt ratio. In the medium term, the achievement of progressively larger primary surpluses and the impact of growth in GDP will serve to increase the downward trajectory of the debt ratio.

It should be noted at present Ireland has an obligation to correct the general government deficit under the excessive deficit procedure (EDP) and as such, is not subject to the debt rule. The Government is committed to achieving the goal of exiting the EDP by reducing the deficit to less than 3% of GDP by 2015. It is this objective that the Government is committed to achieving, which will provide the confines within which Budget 2015 measures will be finalised.

Three years after exiting the excessive deficit procedure, the debt rule will fully apply. Under the debt rule, Ireland must make steady progress towards reducing the debt to GDP ratio to 60% of GDP over the long term.

Regarding the prospect of ameliorating measures to facilitate economic growth, the Deputy will be aware that it is the standard practice for the Minister for Finance to review all taxation policy before presenting a new budget to the Oireachtas. I have at all times tried to design policies to encourage growth while also addressing the need to restore stability to the public finances. Within three months of coming into office, the Government launched the Jobs Initiative. More recently, in Budget 2014 I introduced a package of 25 measures costing over €500m to promote jobs and growth in the economy. However, given that we are still a number of months away from the Budget, I am not prepared to be drawn into speculation on specific budgetary matters at this time.

Update: Reducing the Debt to GDP Ratio 4th July 2014

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