FINANCE Minister Brian Lenihan yesterday confirmed that day-to-day spending on services would be cut back this year as the Government wrestles with the economic downturn.
But Mr Lenihan insisted the Government would continue to maintain capital spending on infrastructural projects in areas such as transport.
Mr Lenihan admitted “savings” would have to be made this year, but said priority would be given to capital spending.
“I don’t think it’s a good idea to do what was done in the 1980s and abandon capital projects — not build up our productive capacity when times are difficult,” he said.
This means that day-to-day services in areas such as health, education and social welfare may all be targeted for savings. All Government departments will be expected to identify where they can make cutbacks.
Mr Lenihan will discuss the issue with the Taoiseach and his fellow ministers at the weekly Cabinet meeting tomorrow.
It’s understood Mr Lenihan is seeking to cut spending by up to €1 billion this year. Last week, he stated the cutbacks would have to begin immediately in order to protect the public finances.
“On the spending front, if we are to take action, we have to start taking action now because the reality is you cannot reposition spending for 2009 unless you start taking action in 2008,” he said.
Half-yearly Exchequer receipts are due on Wednesday and are expected to show that tax revenues are almost €1.5bn behind forecasts, leaving the Government in an increasingly difficult position as the country moves into recession.
Mr Lenihan said the picture would be much clearer once the Exchequer receipts were published.
He said no decision had been taken yet in relation to a public sector pay freeze. But the country’s trade unions will resist any Government call for a freeze on public workers’ salaries.
Meanwhile, the Taoiseach will attempt to shore up US confidence in the Irish economy when he visits Wall Street next month.
The Government yesterday confirmed Mr Cowen would make his first official trip as Taoiseach to the US in mid-July.
He will visit New York for a series of engagements with key political and business leaders, as well as representatives of the Irish community, the Government said.
Events will include a visit to the New York Stock Exchange on July 16 and an address to the Wall Street 50 dinner.
The event is an annual function which celebrates “the best and brightest” of Irish Americans working on Wall Street.
“The Taoiseach is expected to discuss the global economic situation, how to further develop the relationship between Ireland and America and the issue of immigration reform and the undocumented Irish in the US,” a Government spokesman said.
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