EU/IMF demand a three-year budget cuts plan
THE EU and IMF are pushing the Government to bring in a three-year budget plan to show how it is going to meet its debt-reduction targets.
The previous Fianna Fail-Green government had signed up to a four-year economic recovery plan up to 2014, but the current Government only accepted its targets on spending cuts and taxation for this year and next year.
The three-year plan would force the Government to show what cuts it intends to make to meet its commitment under the bailout deal to reduce our deficit to 3pc of gross domestic product by 2015.
Fianna Fail finance spokesman Michael McGrath said the EU, IMF and European Central Bank had made their position very clear during a private meeting with his party last month.
"I believe the troika are very keen on the Government having a multi-year plan. I think that is a sensible approach. Investors and ordinary consumers need to have certainty about the Government's approach over the next three years," he said.
The Department of Finance last night would not comment on the proposed three-year spending plan, saying that no decision had been made yet.
But the most likely time for the publication of such a plan is alongside the pre-budget outlook at the end of October.
Economist Jim Power said yesterday that he believed a three-year plan would make no difference to international market perceptions of Ireland.
"It will bring a bit of certainty on local policies, but what happens to Ireland over the next three years is totally out of Ireland's control. External factors will determine the outcome," he said.
There is considerable uncertainty about current growth rates, given the global fears the US will slip back into recession. And if our growth rates fall short of target, it will mean the Government will have to introduce even deeper cuts to meet its deficit reduction targets.
Mr Power warned yesterday that Ireland should not attempt to cut more than €3.6bn from this year's budget.
"A bigger adjustment isn't possible -- anything more than €3.6bn would be pushing us over the edge," he said.
Junior Minister for Public Sector Reform Brian Hayes confirmed that €3.6bn was still the current working target. He said there was some logic in favour of having a three-year plan.
It would, "firstly, (give) people some certainty as to what they will face over the next three years (and), secondly, (would ensure) greater parliamentary scrutiny of the Government", he said.
Mr Hayes said the issue of a three-year budget plan was a matter for Government and could only be decided when the cabinet returned next month.