The Minister for Finance and for Public Expenditure and Reform, Paschal Donohoe T.D., today (Tuesday) highlighted the need to run budgetary surpluses over the medium term in order to address the vulnerabilities associated with the rising share of corporation tax receipts.
Speaking at the Institute of International and European Affairs (speech to follow), Minister Donohoe outlined several external factors that threaten the Irish economy, including forthcoming changes to global corporate taxation policy. In order to ensure that the public finances can absorb the impact of these changes, the Minister set a number of medium-term targets which are to achieve a budgetary surplus of at least 1 per cent of GDP by 2022 and to achieve a debt-to-GNI* ratio of 85 per cent by 2025.
The Minister outlined that these targets are contingent upon continued economic growth and that, in the event of disorderly Brexit for example, running a deficit is the appropriate way to cushion the impact on the economy. Even in a disorderly exit scenario, the Minister envisages that balance would be restored by around 2023. In relation to the debt target, annual nominal GNI* growth of 3½-4 per cent, accompanied by budgetary surpluses over the cycle, would be sufficient to achieve this target.
The Minister said:
Note to Editors:
The Minister’s speech identifies several external pressures (of a longer-term, structural nature rather than short-term, cyclical nature). These are: