Ireland’s budget deficit for 2012 comfortably inside troika target

Ireland's budget deficit for 2012 was 7.6 per cent of GDP, comfortably inside the EU-IMF troika's target of 8.6 per cent, according to the Department of Finance's Maastricht Returns.

The figures, filed twice yearly by each member state to Eurostat - the EU's statistics office, represent a considerable improvement on the Government's Budget 2013 deficit forecast of 8.2 per cent.

The department said the revised forecast deficit for 2013 was 7.4 per cent of GDP, broadly in line with the 7.5 per cent projected at Budget time and within the programme target of 7.5 per cent.

The debt/GDP ratio essentially measures a country’s ability to carry its national debt.The troika programme for Ireland has set a deficit target of 3 per cent of GDP by 2015.

Across the 17-member euro zone, figures showed the combined fiscal deficit was 3.7 per cent of GDP, compared with 4.2 per cent in 2011 and 6.5 per cent in 2010.

Sharp public spending cuts have been the euro zone's strategy for clawing back credibility with investors after a decade-long credit-fueled boom.

Record unemployment and protests across Europe, however, are forcing something of a rethink, with the focus shifting to growth strategies.

Both France and Spain, who fell short of the budget deficit goals last year, are expected to get more time to reach their targets.

France's 2012 budget deficit was 4.8 pe rcent of economic output, compared with a target of 4.5 per cent.

Spain's budget shortfall was 7.1 per cent and well above Madrid's original target of 6.3 per cent.

EU leaders are desperate for economic growth as the euro zone struggles through its second consecutive year of recession, and some officials say they will back off from the spending cuts blamed for deepening Europe's economic downturn.

However, it is not yet clear how big a policy shift EU policymakers are planning.

EU Economic and Monetary Affairs Commissioner Olli Rehn said in Washington last week that financial leaders from the group of 20 economies calling for less austerity were "preaching to the converted."