Irish Fiscal Advisory Council - first report - FULL TEXT and main findings

Posted on Wednesday, 12 October 2011
Body

This first Fiscal Assessment Report, published on October 12, 2011, provides an assessment of the Government’s fiscal stance and projections as set out in the Stability Programme Update (SPU) last April, taking into account significant recent developments.



Main Findings of Report

Macroeconomic and Budgetary Assessment

• The macroeconomic and budgetary projections in the SPU were broadly appropriate at the time they were published last April. There have, however, been a series of significant developments since then that impact on Ireland’s medium-term budgetary outlook.

• Most of the main forecast agencies have recently revised down their projected growth rates for Ireland, in part reflecting increasing uncertainties about the global environment. This has clear downside risks.

• On the upside, the changes agreed by European leaders in July 2011 should result in interest savings of approximately €1 billion per year from 2012 to 2014. Furthermore, the funding requirement to the State as a result of banking recapitalisation is now likely to be approximately €3.5 billion lower than was envisaged last March.

• The Council estimates that an additional €400 million in discretionary adjustments would be required to meet the 8.6 per cent General Government deficit target for 2012. Nevertheless, the total discretionary adjustments planned in the SPU for the period 2012–2015 should still be sufficient to bring the General Government deficit below 3 per cent of GDP by 2015.



Assessment of Fiscal Stance

• The Government faces an unenviable balancing act in deciding the appropriate fiscal stance for 2012–2015: the domestic economy remains weak, while the debt and funding situation for Ireland will remain fragile for some time to come.

• Weighing up the different elements involved, retaining the current SPU targets as a percentage of GDP is viewed as within the range of appropriate courses of action.

• Relaxing the budgetary targets agreed in the programme with EU/IMF is not a viable option, given the need to safeguard hard won gains and the creditworthiness constraints imposed by both the market and official creditors.

• The Council’s main conclusion is that there is a strong case for a strengthening of the fiscal consolidation effort beyond that targeted in the SPU. The Council believes that a General Government deficit target of the order of 1 per cent of GDP for 2015 would be appropriate. The Government’s current target in the SPU is a deficit of 2.8 per cent.



Other Findings of Report

• In the case of 2012, the Council suggests only a relatively modest reduction in the targeted General Government deficit, from 8.6 to 8.4 per cent of GDP. This would imply, taking into account the range of economic developments since April, increasing the required adjustment measures from the SPU plan from €3.6 billion to €4.4 billion in 2012.

• For 2012-2015, the Council estimates that additional adjustment measures of approximately €4 billion will be needed to meet the 1 per cent General Government deficit target put forward by the Council.



• This suggestion is not made lightly, given the painful adjustment measures taken since 2008. However, on balance the Council believes that a more rapid restoration of sound public finances, as well as being highly desirable in its own right, will have important favourable effects on the country’s creditworthiness. It would also provide a degree of insurance that the existing programme targets will be met. The longer term implications for the economic and financial health of the country should not be underestimated.



• It is important for policymakers not to reduce their options in order to achieve the necessary consolidation by selectively putting certain measures – e.g., tax rates, social welfare rates, and public sector pay rates – out of bounds.

The Irish Fiscal Advisory Council was established in June 2011. The Council’s mandate includes providing an assessment of the appropriateness of the fiscal stance set out by the Government and its economic and budgetary projections.

Members of the Fiscal Advisosy Council: John McHale (Chair), Sebastian Barnes, Alan Barrett, Donal Donovan, Róisín O’Sullivan.

The full text of the Fiscal Council's First Report can be downloaded below

×
This website uses cookies
This website uses cookies to improve user experience. By using our website you consent to all cookies in accordance with our Cookie Policy. Read more
Save & Close
Accept all
Decline all
Show details Hide details
Cookie declaration
About cookies
Strictly necessary
Performance
Targeting
Strictly necessary cookies allow core website functionality such as user login and account management. The website cannot be used properly without strictly necessary cookies.
Cookie report
Name Domain Expiration Description
CookieScriptConsent www.socialjustice.ie 1 month This cookie is used by Cookie-Script.com service to remember visitor cookie consent preferences. It is necessary for Cookie-Script.com cookie banner to work properly.
AWSELBCORS www.podbean.com 5 minutes The cookies AWSELB and AWSELBCORS are functionally the same cookies. The latter has an explicit SameSite attribute set because of changes made from Chrome 80 and upwards. 
__cf_bm .podbean.com 30 minutes This cookie is used to distinguish between humans and bots. This is beneficial for the website, in order to make valid reports on the use of their website.
Performance cookies are used to see how visitors use the website, eg. analytics cookies. Those cookies cannot be used to directly identify a certain visitor.
Cookie report
Name Domain Expiration Description
_ga .socialjustice.ie 2 years This cookie name is associated with Google Universal Analytics - which is a significant update to Google's more commonly used analytics service. This cookie is used to distinguish unique users by assigning a randomly generated number as a client identifier. It is included in each page request in a site and used to calculate visitor, session and campaign data for the sites analytics reports.
_gid .socialjustice.ie 1 day This cookie is set by Google Analytics. It stores and update a unique value for each page visited and is used to count and track pageviews.
Targeting cookies are used to identify visitors between different websites, eg. content partners, banner networks. Those cookies may be used by companies to build a profile of visitor interests or show relevant ads on other websites.
Cookie report
Name Domain Expiration Description
_gat_gtag_UA_30714684_1 .socialjustice.ie 1 minute This cookie is part of Google Analytics and is used to limit requests (throttle request rate).
YSC .youtube.com Session This cookie is set by YouTube to track views of embedded videos.
VISITOR_INFO1_LIVE .youtube.com 6 months This cookie is set by Youtube to keep track of user preferences for Youtube videos embedded in sites;it can also determine whether the website visitor is using the new or old version of the Youtube interface.
Cookies are small text files that are placed on your computer by websites that you visit. Websites use cookies to help users navigate efficiently and perform certain functions. Cookies that are required for the website to operate properly are allowed to be set without your permission. All other cookies need to be approved before they can be set in the browser. You can change your consent to cookie usage at any time on our Privacy Policy page.
Cookies consent ID:
Cookie report created by Cookie-Script