Wednesday 26 July 2017

Government to do whatever it takes to reach Budget target

Cuts may go beyond estimated €3.6bn as EU-IMF says country not out of the woods yet

IMF chief Ajai Chopra
IMF chief Ajai Chopra

Fionnan Sheahan and Laura Noonan

The Government last night said it would inflict whatever pain was necessary to reach the borrowing target agreed under the EU-IMF bailout.

The coalition parties both agreed they would cut more in December's budget, even if it meant going beyond the previous estimate of €3.6bn.

The IMF backed the Government's approach, with Ajai Chopra saying it endorsed the budget target of reducing borrowing to 8.6pc of economic output.

Despite Labour ministers dismissing the suggestion of going beyond €3.6bn, Public Spending Minister Brendan Howlin said it would meet the budget target, even if it meant cutting even more.

"We are going to achieve that. We will make the call on whatever measures are necessary," he said.

Finance Minister Michael Noonan said the Government was committed to making the necessary level of budgetary adjustment in 2012 of "at least €3.6bn" to ensure the target was reached.

Adjustment

"If it takes more to get to 8.6pc, we'll go above €3.6bn. That is the government position. We will go above €3.6bn. We are not being coy about that," he said.

"We will take all the necessary measures to reach 8.6pc. At present, it doesn't look as it will be a huge amount higher," he added.

Mr Noonan also insisted there wasn't any difference between the parties on the budgetary target.

The minister said the Government would announce the total package of spending cuts and tax hikes in the first week of November.

He said the Coalition was deliberately holding off on announcing the figures until after the presidential election.

"We don't want to distract from it (the presidential election) with mundane matter like budgets," he said.

IMF chief Ajai Chopra backed the Government efforts to meet the budget target.

"Nobody is fixated on a specific number over here," he said.

"We have endorsed the target of 8.6pc as the deficit targetnext year," he added.

He stressed that the Government needed to generate growth.

But the IMF-EU team also warned the country was not out of the woods yet.

Mr Chopra stressed that while Ireland was doing well there were "downside risks" that could knock the programme off course.

As IMF European Department deputy director, Mr Chopra is head of the IMF mission here. Ireland's recovery is heavily dependent on exports and "globally the outlook has worsened", Mr Chopra said, pointing to the obvious consequences of this for Irish growth.

Ireland could also be hit by the eurozone debt crisis, he added, before listing the "domestic threats" to Ireland's recovery, including high levels of household debt, emigration and an exodus of "human capital". "A lot of good things are going on in Ireland but I don't think one should lose sight of the risks," he stressed.

Meanwhile, the European Commission's mission chief Istvan Szekely said Ireland was "not out of the woods yet".

"It will be a long journey," Mr Szekely added. "It will take a lot of sacrifice on everyone's part to finish this journey."

Irish Independent

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