Speaking as Ireland’s Finance Minister, Paschal Donohoe, welcomed the idea of introducing an expenditure benchmark into the EU’s fiscal rules, on Wednesday 11 May during a debate with the European Parliament’s Committee on Economic and Monetary Affairs.
“I think it’s a good idea”, he replied to a question from Marek Belka (S&D, Poland) on this measure which should be, “preferably, as simple as possible”. He said that a reform of the Stability and Growth Pact to include a expenditure benchmark or ceiling on public spending would not make a huge difference in Ireland as the government has already been successfully implementing it since 2020, with a threshold for spending increases of “ approximately 5% per year”.
In July 2021, the European Parliament expressed its support for such a measure when it adopted its position on a reform of the European economic governance framework (see EUROPE 12758/4).
Portuguese MEPs Margarida Marques (S&D) and Lídia Pereira (EPP) questioned the minister on whether new financial instruments should be developed at EU level to meet the huge investment needs ahead. Mr Donohoe was very cautious. As a minister from a country that would be a net contributor to these instruments, the priority is to demonstrate that the instruments we have created - especially the European Recovery Plan - are working and making a difference before starting a discussion on new tools, he warned.
Ireland’s finance minister outlined how his country has restored its public finances and credibility with investors after ending three years of European financial tutelage in 2013 (see EUROPE 10984/16).
One of the keys, he said, was to combine a sustained level of growth with control of public spending. In particular, he argued that his country had maintained primary budget surpluses (excluding debt service) for “six years” and would borrow very little, if at all, on the markets, despite the current economic uncertainty for the EU linked to the consequences of the Russian invasion of Ukraine. And this Irish policy will be applied regardless of the decision the European Commission takes on the application of the Stability Pact starting the 1 January 2023, Mr Donohoe said.
Ireland is forecasting growth of 4.25% of GDP in 2022, down from 13.7% in 2023, and public debt below 56.0% of GDP this year, down from 58.4% next year.
To his fellow countryman Mick Wallace (The Left) who pointed to the Irish government’s “failure” regarding affordable housing in Dublin, Mr Donohoe said that thousands of homes would be delivered by 2022, citing a number of areas in Dublin that were concerned.
The Irish authorities will have repaid 75% of their borrowings from the eurozone’s rescue funds (EFSF and EFSM) in 2031. They have fully repaid those contracted with the IMF. The end of all refunds is scheduled for 2042. (Original version in French by Mathieu Bion)