1 / 15

Assessment Report: Ireland's Progress, Fiscal Projections, and Medium-Term Budgetary Framework

This briefing presents the 8th Fiscal Assessment Report, highlighting Ireland's economic recovery, improving public finances, and the implementation of the Medium-Term Budgetary Framework. It discusses the country's compliance with fiscal rules, forecasts for growth and government spending, and the challenges in medium-term budgetary planning.

shaunm
Download Presentation

Assessment Report: Ireland's Progress, Fiscal Projections, and Medium-Term Budgetary Framework

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Press BriefingFiscal Assessment Report, June 2015 03 June 2015

  2. IFAC: Some Background • Mandate: • Assess official forecasts • Assess the fiscal stance • Assess compliance with the budgetary rule • Endorsement of official macroeconomic forecasts • Five-member Council and five-member Secretariat • 8th Fiscal Assessment Report

  3. Context for Budgetary Policy • Ireland on track to exit the EDP based on 2015 outturn • Normal operation of Ireland’s new Medium-Term Budgetary Framework will come into effect for 2016 • Operation of the MTBF is a major focus of this assessment report

  4. Ireland Continues to make Progress as Economic Activity is Recovering and Public Finances Improving Real GDP and Real GNP (% Change Y-Y) Unemployment (% Total Labour Force)

  5. Recovery is Gradually Broadening Contributions to Real GDP Growth (Percentage Points, Y-Y)

  6. Deficit Continues to Fall General Government Balance (% of GDP)

  7. But Crisis Leaves Legacy of High Debt Levels General Government Debt (GGD) (% of GDP, GNP and Hybrid)

  8. Uncertainty Around Growth Prospects Real GDP Fan Chart Based on SPU 2015 projections (to 2016)

  9. Deficit Sensitive to Growth Shocks General Government Balance Paths (% of GDP) Note: The figure shows alternative projections of the balance ratio based on GDP growth forecasts that deviate from SPU2015 projections by 0.5, 1.0 and 1.5 percentage points in either direction. Sources: Department of Finance, internal IFAC calculations based on the Council's Fiscal Feedbacks Model.

  10. Medium-Term Budgetary Framework • Value of framework in preventing a return to the boom-bust cycle • A strong framework has been put in place comprising domestic and European elements • But issues of implementation in the SPU/SES • 2016 • Post-2016

  11. Compliance with Budgetary Rule in 2016

  12. Beyond 2016: The Fiscal Projections in the SPU • Post-2016 budgetary projections in SPU 2015 based on mainly technical assumptions for government revenue and expenditure • Forecasts show over-compliance with the fiscal rules even though stated policy in the Spring Economic Statement is to target minimum rule compliance • Forecasts for government spending do not fully account for likely costs of demographic ageing and cost pressures in delivering existing public services • Published tax revenue forecasts do not take into account Government commitments to reduce taxes • The ratio of non-interest government spending to GDP is projected to fall by over 5 percentage points between 2015 and 2020

  13. Illustrative Expenditure Scenario

  14. Requirements of the Medium-Term Budgetary Framework • Under the Budgetary Frameworks Directive, plans should be provided both on a no-policy change basis and also based on “policies envisaged” by the Government • Full acknowledgement of spending pressures, the overall value of intended revenue measures and a deficit path should play a central role in medium term projections • A realistic projection for the medium-term budgetary position is essential for medium-term budgetary planning • System of multi-year expenditure ceilings is not working effectively because the Government has consistently made adjustments to the ceilings • The move to annual revisions to the Expenditure Benchmark has removed the multi-year anchor

  15. Summary • Ireland will likely exit EDP on the basis of the 2015 outturn • The fall in the structural budget deficit in the Government’s plan is insufficient to meet the requirements of the Budgetary Rule in 2016 • Compliance with the Expenditure Benchmark (EB) would also be called into question if tax buoyancy is excluded • Post-2016, the forecasts in SPU 2015 does not fully meet the requirements of a medium-term fiscal plan as envisaged in the Government’s budgetary framework • Providing detailed budgetary plans as envisaged in the Directive is essential the medium-term fiscal position • Government needs to clarify how the system of multi-year ceilings will operate under the revised EB framework

More Related