Budget independence is now history

THE days of the Finance Minister arriving in the Dáil on budget day with a secret list of how he will raise and spend your money is over.

For Ireland, it ended last year when the previous government signed an agreement for a €67.5 billion bail-out. For all other eurozone countries, it will end next year.

Taoiseach Enda Kenny told German chancellor Angela Merkel in Berlin during the week that Ireland was looking forward to regaining its sovereignty, but agreements already reached means it will never be quite the same.

Plans will be unveiled in Brussels on Wednesday seeking to strengthen new budget rules, and Ms Merkel wants to make sure countries stick to the rules by changing the EU treaties to allow errant countries to be taken before the European Court of Justice.

At the moment, Ireland is subject to two regimes — one because of the bailout agreement with the troika, and the second as a member of the eurozone.

As a “programme country”, together with Portugal and Greece, a draft of the budget must be sent to the troika in advance of it being agreed by the Dáil. This is distributed to all member states through the European Economic Committee, made up of officials from finance departments.

In Germany, because of a deal Ms Merkel had to make with the Bundestag over changes to the bail-out fund, she agreed that all

details would also go to the Budget Committee.

This committee leaked the details of the Irish budget as they were studying it on Wednesday, the same day of Mr Kenny’s first official visit to Germany.

The budget must be based on achieving the targets agreed with the troika up to the end of 2013, and each EU government is entitled to assure itself that this is the case, since they are the ones that will agree to pay out the €19bn due in 2012.

The memorandum of understanding sets out what savings must be made. The Government might be allowed to change some of the details, provided the bottom line remains the same — a budget deficit of 3% by 2015.

From 2012, budget plans must be sent to the Commission in April. Countries cannot increase their spending by more than their average GDP growth and must aim for a balanced budget. Budget deficits must be no more than 3% of GDP and debt no more than 60% of GDP.

On Wednesday, European Commission President Jose Manuel Barroso will put forward further rules that would mean the Commission could request member states to redraft their budgets and put more emphasis on countries implementing the reforms they sign up to.