Irish Deficit Is Budget Target - Not Cash Value

The planned adjustment package in next December's budget may be more than the €3.6m already flagged, the Dáil Minister for Finance Michael Noonan has warned.

While he welcomed the announcement by the Chancellor of the Exchequer in the UK, George Osborne, that he proposes a reduction of the interest rate on the UK bilateral loans to Ireland, he said he would not be "tied down to a figure of €3.bn" as there was a debate over whether it would be enough to achieve the 8.6% target.

"I welcome the announcement by the Chancellor that the UK proposes to reduce the interest rates on the loans to Ireland to a level slightly below the new European Financial Stability Fund (EFSF) interest rate.

"The support of the UK reflects the important economic relationship between Ireland and the UK.

"The level of trade between Ireland and the UK supports jobs in companies of all sizes from sole traders through to the largest companies.

"The willingness of the UK to assist Ireland reflects how both countries gain through sustainable economic growth that creates long term jobs," he said.

But, despite the easing of the EU-IMF bailout terms, Mr Noonan said the target was to bring the deficit down to the 8.6% of GDP next year, and that would require an adjustment of at least €3.6bn.

"The [money] is not the target, it's the 8.6%…and there's a debate over whether the €3.6bn gets us there or not," he explained.

"That is the minimum but I've mentioned a figure of up €4bn. This far out from a budget, it's impossible to be precise," noting that next year's adjustment is about two-thirds of this year's adjustment.

(BMcC)