Belfast Telegraph

Thursday 21 August 2014

Economy advice 'just an opinion'

Sinn Fein's Mary Lou McDonald described the IFAC plans as reckless

Taoiseach Enda Kenny has moved to ease fears that the country is staring down the barrel of two billion euro more in cuts following a startling economic review from his advisers.

He insisted that the hard-hitting recommendation from the independent Irish Fiscal Advisory Council (IFAC) is just an opinion, despite its position as a top state think-tank.

He said: "We set up the independent fiscal council with the purpose of allowing the independents to give their views. This is an independent report from the fiscal council. Obviously it's not binding for government."

Sinn Fein deputy leader Mary Lou McDonald described the IFAC plans as reckless. She said: "If implemented they would damage the economy, further undermine vital frontline public services and hurt families."

IFAC, chaired by Professor John McHale, NUI Galway, has advised additional savings of 1.9 billion euro up until 2015. In its third assessment of economic conditions, it said Ireland is on course to meet its deficit targets for this year but that debt sustainability and credit-worthiness remains fragile.

The Taoiseach said the Government would reflect on the advice. He said: "What we want is to maximise savings to minimise cuts."

The Government is required by the bailout troika of the IMF and European chiefs to find 3.5 billion euro of savings next year: 1.25 billion euro in tax and the rest in spending cuts.

IFAC warned about significant spending overruns in the departments of health and social protection over the first eight months of this year. Its review said that Ireland's debt-to-GDP ratio, what a country owes compared with what it produces, is expected to peak next year at just over 120%.

It urged the Government to look at placing most of the pressure from an additional 1.9 billion euro of savings in the budgets for 2014 and 2015.

Of its plan, the advisory group said: "This would also help to put the debt-to-GDP ratio on a faster downward trajectory and would provide additional insurance, albeit limited, in the effort to ensure debt sustainability."

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