30 May 2012

Council Recommendation on the National Reform Programme 2012 of Ireland

In Ireland, the fiscal deficit target for 2011 (10,6 %) was achieved by a significant margin and the budget for 2012 targets a fiscal deficit of 8,6 % of GDP, in line with the financial assistance programme ceiling.

Medium-term fiscal consolidation plans are consistent with the financial assistance programme's deficit ceilings and a deficit below 3 per cent of GDP by 2015. The recapitalisation of domestic banks envisaged by the 2011 Prudential Capital Assessment Review of the Central Bank of Ireland has been substantively completed and domestic banks' deleveraging exceeded the financial assistance programme's targets for 2011 as a whole. Structural reforms to enhance competitiveness and allow stronger job creation are significantly advanced.

The Council is of the opinion that the macro-economic scenario underpinning the budgetary projections of the Programme is plausible. Economic growth projections in the Stability Programme are similar to the Commission services 2012 spring forecast. The objective of the budgetary strategy of the Stability Programme is to reduce the general government deficit below the 3 per cent of GDP threshold by end 2015, which is in line with the deadline set by the Council for correcting the excessive deficit. The Stability Programme currently projects a deficit of 8.3 per cent of GDP (below the programe target of 8.6 per cent of GDP) in 2012, 7.5 per cent of GDP in 2013, 4.8 per cent of GDP in 2014 and 2.8 per cent of GDP by the end of the programme period in 2015. This path is underpinned by consolidation measures of 2.7 per cent of GDP implemented in the budget for 2012, and broad consolidation measures of 3.9 per cent of GDP in 2013-2014 and a further partly specified consolidation effort of 1.1 per cent of GDP in 2015. The Stability Programme restates the medium-term budgetary objective (MTO) of a structural general government deficit of 0.5 per cent of GDP, which is not reached within the programme period. The MTO adequately reflects the requirement of the Stability and Growth Pact. General  government debt is above 60 per cent of GDP and is projected to increase from 108 per cent of GDP in 2011 to 120 per cent in 2013 before starting to decline. For the duration of the excessive deficit procedure until 2015 and in the three years thereafter, Ireland will be in a transitional period and the budgetary plans would ensure sufficient progress towards compliance with the debt reduction benchmark of the Stability and Growth Pact.

Council Recommendation (6.7.12)

Commission Proposal

Commission Staff Working Paper

National Reform Programme (April 2012)

Stability Programme (April 2012)

Stability Programme Assumptions (April 2012)

Euro Plus Pact Commitments (April 2012)

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