State to borrow €9bn over next three years

OPPOSITION parties have accused Finance Minister Charlie McCreevy of doing a U-turn after he confirmed the Government is to borrow €9 billion over the next three years.

Mr McCreevy said more than half the money would be spent on major capital projects, such as infrastructure.

He said the Government has decided to increase borrowing because of the lower-than-expected tax take this year. The Department of Finance has already predicted tax receipts will be €500 million below target by the end of the year.

The Government is set to borrow €1.86 billion this year. That figure is set to rise to €3 billion a year for the next three years.

"The figure is going up because the tax revenues are lower than anticipated, but the Exchequer is already spending over €5 billion in capital investment this year twice the rest of Europe," Mr McCreevy said yesterday.

However, opposition parties last night rounded on the minister, claiming he has been forced into an embarrassing U-turn since the general election.

"Mr McCreevy completely rubbished Labour's policy of borrowing for infrastructure projects before the election and now he is taking our policy on board 14 months later," Labour finance spokeswoman Joan Burton said.

The finance minister was against the notion of borrowing for capital projects, even though Labour pointed out that it was vital to improve our competitiveness, Ms Burton added.

Fine Gael claimed Mr McCreevy has come under increasing pressure from Taoiseach Bertie Ahern in the past two weeks to relax his borrowing policy to minimise the cutbacks in the next budget.

"The Government will have to find an extra 2 billion in the next budget to finance the benchmarking and pension fund payments alone.

"They need this extra money if they are to avoid massive cuts.

"Mr McCreevy has no credibility any more because he was totally against our policy of borrowing for infrastructure projects," Enterprise, Trade and Employment spokesman Phil Hogan said.

Mr Hogan called on Mr McCreevy to say how the money would be spent and where it would come from.

But Mr McCreevy's spokesman rejected there was any change in Government policy since the election.