|From left to right: Jean-Claude Trichet, President of the European Central Bank, and Brian Lenihan, Irish Minister for Finance, in June 2010.
Ireland Four Year Plan for Budgets: The Government
has today announced that an overall fiscal adjustment of €15bn over the next four years
is warranted in order to achieve the target deficit of 3% of GDP by 2014. The
key reasons for the significant increase from the figure announced in Budget
2010 are lower growth prospects both at home and abroad and higher debt interest
The Department of
Finance says the purpose of the Four Year Plan for Budgets and Economic Growth
is to chart a credible way forward for this country. The size of the adjustment
for 2011 and the distribution over the remaining years will be announced in the
Four Year Plan. The plan will contain targets for growth and strategies for the
achievement of those targets.
said it realises that the expenditure adjustments and revenue raising measures
that must now be introduced will have an impact on the living standards of
citizens. But it is neither credible nor realistic to delay these measures. To
do so would further undermine confidence in our ability to meet our obligations
and responsibilities and delay a return to sustainable growth and full
employment in our economy.
obligations are clear. We must demonstrate that we are bringing sustainability
to our public finances. We must stabilise our debt to GDP ratio over the period
of the Plan. And we must set out our strategy for returning our economy to
growth," a Government statement concluded.
Following briefing at the Department of Finance this
evening, Fine Gael's Finance Spokesman Michael Noonan said
he understood the breakdown over each of the four Budgets
will be announced during the third week of November.
The Government's statement came after the Cabinet held a day-long
session to discuss the Budget and the four-year economic
Ministers met for over three hours at Farmleigh House in
the Phoenix Park last night.
The meetings were ahead of this week's Dáil debate on the
The Government has warned that in addition to increased
taxes, there will be spending cuts in health, social welfare
Minister for Finance Brian Lenihan confirmed last night that the
first installment of the four-year plan would have to be the
“The Government accepts that there must be
significant frontloading in relation to this figure in the
budget this year . . . that first instalment will have to
frontload a sizeable part of that adjustment,” he told
The Government's is targeting an average growth rate of 2.75% for the next
four years. If growth is lower, the fiscal adjustment will be even bigger than
€15bn. However, a stronger international recovery would ease the pressure.
Reducing jobs numbers and increasing local demand is key to the domestic
recovery.IBEC chief economist Fergal O'Brien said:"It is essential that we don't stunt our fledgling
economic recovery by overtaxing the country. The bulk of the adjustment must
come in the form of current expenditure reductions.
"The Irish economy remains in the international spotlight and it is vital that
we take the steps necessary to restore confidence. We must demonstrate our
ability to solve our own problems and unfortunately this means tough decisions."