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Friday 29 August 2014

Fiscal Advisory Council wants €3.1bn 2014 budget adjustment

Published 28/07/2013 | 18:53

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THE GOVERNMENT must stick to its €3.1bn Budget 2014 adjustment, chairman of the Fiscal Advisory Council John McHale said today.

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He said this adjustment should be pursued in October's budget and it was difficult to see how deficit targets would be met if the Government scaled back on cuts.

His comments came on the heels of the Central Bank's quarterly commentary calling for the same plan for Budget 2014.

Although Taniste Eamon Gilmore said this weekend that the €3.1bn was not an agreed target.

The Government will have to decide how best to use the wriggle room provided for by the Anglo promissory notes deal while it gets the budget deficit below 5.1pc in 2014.

Finance Minister Michael Noonan is heading up discussions with the EU/IMF/ECB troika on how Ireland can be weaned off bailout funding at the end of the year.

Professor McHale said: "The money adjustment targets are directly relevant in that much of Ireland's credibility in terms of showing it has the political capacity to make the necessary fiscal adjustments really revolve around meeting those targets," he told RTE in an interview.

"Given that the Social Protection budget is about 40pc of total spending, and the adjustments that were pencilled in of €440m involves about a 2pc to 2.5pc reduction in Social Protection spending"

He added: "it is hard to see how the necessary adjustments could be achieved if there was a significant scaling back beyond that €440m."

 

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