THE finance ministers of the 15 euro countries told Ireland in no uncertain terms that it must act immediately to cut the burgeoning public debt, putting further pressure on the Government to make cuts in next week’s budget.
They have recommended the narrow Irish tax base be broadened to create more sustainable revenue streams, and align them to reduced expenditure levels.
They also say the Government must make temporary measures, such as levies, permanent by including them in future tax rates.
Overall, they say the Government must spell out detailed measures and implement reforms, including reducing expenditure and reconsidering investment priorities, in line with the changing economic environment.
The EU ministers agreed the budget deficit should not exceed 9.5% of GDP this year, although Taoiseach Brian Cowen has clearly indicated it will be more, even after next week’s budget.
As a member of the eurozone, Ireland is committed to maintaining a budget deficit of no more than 3% of GDP and under the Stability and Growth Pact must submit a plan by October on how they intend to return to a more balanced budget by 2013.
Economics Commissioner Joaquin Almunia acknowledged that the economy had deteriorated since the Government gave them the 9.5% ceiling three months ago, but repeated that this remained the target.
However, he said he would analyse Tuesday’s budget and refused to say whether Ireland would be allowed deviate from its first target.
The document dealing with Ireland’s excessive deficit notes the budget deficit has been widening from the 9.5% in the official figures given to the commission.
Finance Minister Brian Lenihan briefed his fellow ministers on the actions the Government had already taken and on the emergency budget on April 7.
Mr Almunia said he fully agreed with the Government’s financial strategy, saying: “We are very happy with the way the Irish Government has assumed its responsibilities. We endorse their efforts and look forward to knowing the budgetary measures that will be announced. We are co-operating with them, trying to help as much as possible.”
The president of the European Central Bank, Jean-Claude Trichet, when asked if there was anything else the bank could do to show solidarity with Ireland, said their actions so far were “a formidable help for Ireland which should not be underestimated.
“We are refinancing in an unlimited fashion at fixed rates, Irish commercial banks through the Irish national bank according to the framework of the euro area, on the one-week, one-month three-month, six-month basis and on the basis of a collateral framework that is very, very open, very forthcoming and has been made more forthcoming during therecent period since the intensification of the crisis”, he said.
© Irish Examiner Ltd. All rights reserved