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This government remains fixed on the proper stewardship of the public finances.-Minister Brendan Howlin

Posted on December 03, 2015 at 05:35 PM

Minister Brendan Howlin

 

Minister Brendan Howlin recently responded to an editorial in The Financial Times. Link to article here

Sir,

Your editorial “Ireland should beware a return to boom and bust (November 27) over-eggs the pudding somewhat. The current government, a coalition of the centre left and centre right, is more than aware of the risks of returning to the past. We have spent considerable energy cleaning up that mess.

Our recent Budget has been endorsed as complying with the European fiscal rules by both the eurogroup and our domestic fiscal advisory council. Comparisons with the pre-crash environment are inappropriate. Fiscal policy remains constrained, particularly in relation to the past. One example should suffice — expenditure growth between end 2014 and 2016 is forecast to be 4.2 per cent. Between 2005 and 2007, the last pre-election period in the boom, it was over 25 per cent. Revenue growth over the 2014-16 period is set to comfortably exceed 15 per cent and nominal gross domestic product growth is expected to be in the region of 18 per cent.

Nor is there any temporary corporation tax windfall as your editorial suggests. The Revenue Commissioners have indicated that they believe that 85 per cent of the additional revenue in this area can be factored in as recurring in future years. As things stood anyway, Ireland was set to beat its excessive deficit procedure target comfortably.

On Budget day the 2015 deficit was predicted to be 2.1 per cent of GDP, comfortably within the 2.9 per cent target. It is now clear that it will be much lower than that, falling under 2 per cent with a positive carry-over into 2016 likely to result in an overachievement of budget balance and debt targets for next year. Our debt, until recently described by some commentators as unsustainable, is on a strong downward trajectory and is likely to be below the EU average in 2016.

In the aftermath of a crisis that has occurred partly because nobody cried wolf, it is inevitable that sightings of wolves will abound. Such caution is understandable. Your editorial is one such example but this government remains fixed on the proper stewardship of the public finances.

Brendan Howlin

Minister for Public Expenditure and Reform,

Republic of Ireland

 

 

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