Noonan intends to come in below 5.1% deficit target set by troika
A drop from 5.1 per cent to 5 per cent worth about €160 million, Minister tells Dáil
DIn the Dáil Minister for Finance Michael Noonan said: “I hope to bring in a deficit in the high fours”. Photograph: Frank Miller
Minister for Finance Michael Noonan has confirmed his intention to get below the 5.1 per cent troika deficit target in the budget later this month. It would be “prudent to build in a buffer” in case of “any storm that blows up”, he said.
He told Fianna Fáil finance spokesman Michael McGrath “I hope to bring in a deficit in the high fours”. The Minister said that while the required deficit target was 5.1 per cent “for reasons of market sentiment it is probably important to beat the target”. He said that “at present, without having the full data available to me, I hope to bring in a deficit in the high fours”, though he would not be more specific.
During finance questions in the Dáil Mr Noonan also told the Opposition that if the deficit when down one decimal point from 5.1 per cent to 5 per cent “that is approximately €160 million to €165 million”.
Sinn Féin finance spokesman Pearse Doherty challenged the Minister about comments by Tánaiste Eamon Gilmore that the Government should “just hit the target and not go beyond it”. Mr Doherty asked: “Is it Noonan’s way instead of Gilmore’s way on the 5.1 per cent target?”
Mr Noonan told him: “It’s a fine judgment.” The main purpose of the budget is to “position us for exiting the bailout programme. We are being watched by the international community and the markets.
“If we just cut it to 5.1 per cent and bring it in as a deficit, there is a risk of drift. These matters are never that precise.”
He said “as the year goes on we could come out the wrong side of any storm that blows up. Accordingly it is prudent to build in a buffer and that is why
“I am aiming for the high fours without being more precise than that.”
Mr McGrath said there was clearly a division in Government and it was all in the nature of ongoing political negotiations. “The Tánaiste has been playing a very high-stakes game in recent months, saying there should not be a cent more than is required to get us to a deficit of 5.1 per cent.”
Mr Noonan replied that there were three relevant targets for the budget “the 5.1 per cent deficit, the consolidated target of 3.1 per cent and the issue of achieving a primary surplus next year.
He had told TDs what he was prepared to do and “we will try to bring in an equitable budget despite the constraints on us”.
Independent TD Catherine Murphy asked if the Minister had carried out a risk assessment on long-term unemployment when considering the budget. She pointed to the advice of former deputy IMF director in the Irish bailout Dr Ashoka Mody, who said it was not just a case of prudent fiscal management because the markets would be looking at Ireland to see if it was “sound” from an investment perspective.
Mr Noonan told her: “We have no shortage of advice from some of the celebrity economists attached to some of our business schools or from various people who worked in the IMF over the year Sometimes it misses the point and at other times it is accurate.”
Pressed by Ms Murphy as to whether he would listen to Dr Mody, Mr Noonan said: “I would listen to the advice of any world-renowned expert or economist. Much of the advice is contradictory. One must adhere to one’s best judgment.”