| 13.6°C Dublin

ECB says budget leeway should be used to pay off debt - not ease up on households

Close

Minister for Finance Michael Noonan

Minister for Finance Michael Noonan

Minister for Finance Michael Noonan

THE European Commission and ECB have said that any leeway in the next two budgets should be used to pay off debt, rather than to ease up on households and businesses.

Officials from the Commission and the IMF were in Dublin this week on a four day so called “post programme surveillance” mission.

In a statement released at the end of the trip the officials said this year’s budget deficit is set to be slightly above the most recent budgetary forecast of 3.7pc of gross domestic product (GDP), but still well inside the original target to reach 5.1pc in 2014.

“The economic situation has continued to improve in Ireland since the end of the EU/IMF-financial assistance programme, with the recovery broadening,” the EC and ECB said.

Growth rates of 4.6pc this year and 3.6pc in 2015 are projected, but officials raised concerns about the export sector, which could be hit by a sustained slow down in the Euro area, which is drifting dangerously close to recession.

Earlier in the week sources close to the Commission told the Irish Independent that they were concerned that changes to the Irish Water model announced this week could hurt efforts to get the deficit below the Troika’s 3pc target in 2015.

In their official statement The Commission and ECB said they do expect the deficit to fall below the 3pc target, but warned ministers here to be on the alert for potential slippage.

“The government needs to stand ready to adopt additional measures to address potential future fiscal risks.”

They also recommend cutting the deficit faster than the targets agreed under the bailout, over the next two years, in order t cut the national debt.

“More ambitious deficit targets for 2015 and 2016 would help to bring the still very high government debt-to-GDP ratio firmly on a downward path.”

Online Editors