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Sunday 28 May 2017

'Budget pain will top €3.6bn'

Government pledges to reduce borrowing as bailout review begins

Fionnan Sheahan Political Editor

The Government again indicated yesterday that the budget package of cuts and taxes will be worth more than €3.6bn.

As the IMF-EU bailout team began its latest review of the €85bn deal, a senior minister reiterated that the Government would be sticking to the target of reducing borrowing next year.

The pledge means the Budget will include at least €3.6bn worth of pain, but possibly more.

Due to early forecasts of economic growth being optimistic, the Government is expected to reduce these official predictions later this month.

Changes to the economic growth rate forecasts for 2011 and 2012 will result in more taxes and cuts in December's Budget.

Public Spending Minister Brendan Howlin said the overarching target of reducing borrowing to 8.6pc of economic output would be adhered to next year.

"The Government has repeatedly stated its commitment to the programme targets," Mr Howlin said.

"That will mean we can return safely to the financial markets for funding in as timely a manner as possible.

"The Government's commitment to the programme does not stop us from seeking and agreeing changes ... we have already done this successfully. The Government will continue to do so at the appropriate time."

Mr Howlin also confirmed that the latest draft of the review of all government spending will be discussed with the Troika.

The fourth quarterly review by the team from the European Commission, the IMF and the ECB began officially yesterday and will continue for the next 10 days.

Negotiations

The initial stages are based on reviewing the performance to date. Negotiations on changes to the bailout deal usually only begin later on during the visit.

The IMF-EU team will meet with officials from a range of government departments, including Departments of Finance, Public Expenditure and Reform; Enterprise, Jobs and Innovation; Justice and Health, along with the National Treasury Management Agency and the Central Bank.

Government officials said the discussions would be across a broad range of issues, including macro-economic forecasts, focusing on growth, inflation and public finance forecasts.

Banking will also be discussed with financial system issues, such as deleveraging, funding and financing on the table.

There will be specific focus on competitiveness, including pay, in the legal and health sectors.

The IMF-EU team wants to see reforms of the legal, pharmacy and health professions.

Justice Minister Alan Shatter has drawn up new laws to open up the legal profession to more competition and reduce costs to the consumer.

The Government will seek to negotiate budgetary changes and hang on to the proceeds of state asset sales.

Taoiseach Enda Kenny has signalled that the Coalition will look for permission to stick to its promise to not increase income taxes or cut social welfare rates in this Budget.

Irish Independent

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