The Minister for Finance, Michael Noonan T.D., today (27th April 2012) published Ireland’s Stability Programme Update (SPU) and submitted it to the EU Commission, which incorporates the Spring Forecasts for 2012. On publication the Minister stated:
“Based on my Department’s latest assessment, the Stability Programme Update sets out the Government’s medium-term economic and budgetary strategy. The primary aim of this strategy is to return the public finances to a sound position, which is a key condition for the attainment of strong sustainable employment growth. Investors and consumers will only be confident to invest and spend if they believe the State has its finances in control.
Our economic strategy is complemented by the policies being pursued across Government to support and strengthen job creation and growth. The Action Plan for Jobs and Pathways to Work are examples of innovative policies that will make a real difference to our economy by bringing people from social welfare support into employment.
The high level data over the first four months of this year has been relatively positive. This data showed that:
the Irish Economy returned to growth in 2011, the first time since 2007;
the State’s underlying deficit for 2011 was 9.4% of GDP, which significantly ahead of the target of EU/IMF target 10.6% of GDP; and
the State’s revenues are increasing.
Despite these positives, the Government is keenly aware that the near term remains challenging and that there are very real risks to the forecasts due to the economic uncertainty within the eurozone. Today’s publication sets out a number of additional risk factors in greater detail.”
The Minister continued to outline how the SPU contains the official economic forecasts required under the European Semester and the Minister stated:
“On a number of occasions recently, I have stated that GDP growth for this year in the SPU would likely be revised down compared with the Budget 2012 forecasts. This revision to 0.7% and a marginal revision downwards of growth in 2013 are set out in the SPU. Over the medium term, the growth forecasts are broadly in line with the consensus forecasts, which reflect a gradual firming and broadening out of activity over this time period.
Based on these economic growth forecasts and having taken on board the first quarter Exchequer data, my Department still expects that the General Government deficit target of 8.6% of GDP for 2012 is on track to be achieved. The achievement of the 8.6% target is due to the performance of tax revenue in the first quarter, as well as being further assisted by the likelihood that non-tax revenues are likely to be higher and debt servicing expenditure lower than estimated at Budget time. Continuing to see revenue perform to expectations, while maintaining a control on spending means further progress in achieving budgetary sustainability.
Based on all of this information there is no change to the budgetary adjustment for the 2013-2015 period and our plans remain as set out in the Medium Term Financial Statement published in November 2011.
The Government remains committed to achieving a General Government deficit of under 3% by 2015. We know that a sustainable public finance position is in the interest of all citizens, as it ensures that the State has the resources to pay for essential public services, such as health, social protection and education.”