Economy

Government to invest if troika targets met - Noonan

Minister for Finance sounds cautious note, warning voters not to expect spending spree

[from left] Minister for Finance Michael Noonan, Brazil's central bank governor Alexandre Tombini, US Federal Reserve chairman Ben Bernanke and Saudi Arabia's minister of finance Ibrahim Al-Assaf at the recent G20 finance ministers meeting in Washington. Photograph: Yuri Gripas/Reuters

Tue Apr 23 2013 - 13:21

Ireland will invest in its economy if it has the capacity to do so once targets under an EU-IMF bailout are met, but voters should not expect the Government to embark on a spending spree, Minister for Finance Michael Noonan said today.

His comments come a day after European Commission president Jose Manuel Barroso said that austerity had reached its natural limits of popular support, a signal that Europe is contemplating some easing up on its cornerstone policy of sharp budget cuts.

Sounding a more cautious note, Mr Noonan said that it was too soon to say for sure what the leeway would mean for next year's budget, he insisted today that he would rather invest any spare funds than stash them away as a cushion against future shocks.

"We have laid out a programme for correction and we should stick to the programme and stick to the targets in the programme," Mr Noonan told reporters.

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"Having done that, if there is spare cash around, we should use that money for investment purposes to grow the economy and get people back to work. We shouldn't, just because we are making progress, go on some sort of spending spree."

The leeway provided by the recent bank debt deal is expected to see Ireland's deficit fall to 4.5 per cent of gross domestic product (GDP) next year, inside the troika target of 5.1 per cent.

However, with the outlook for the export-led economy remains shaky, the Central Bank has urged the Government to stick to its original plan to preserve market confidence and maintain a fiscal buffer.

Mr Barroso, said yesterday that austerity had reached its natural limits of popular support.

"While I think this policy is fundamentally right, I think it has reached its limits," he told a conference.

"A policy to be successful not only has to be properly designed, it has to have the minimum of political and social support."

Budget cuts have been at the centre of the euro zone's strategy to overcome a three-year public debt crisis but they are also blamed record high unemployment.

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