Tánaiste Eamon Gilmore has bluntly rejected a call from the head of the Eurozone rescue fund, Klaus Regling, for adherence to a budget adjustment of €3.1 billion next year.
"I don't accept what he said," Mr Gilmore told The Irish Times yesterday, adding that he regarded the crucial target as being a percentage of gross domestic product (GDP) rather than a particular sum of money.
Mr Gilmore is also at odds with the Central Bank in Dublin which yesterday joined other domestic and international organisations in calling for the full €3.1 billion in spending cuts and additional taxes in next year’s budget that the Government had previously committed to implementing under the terms of its EU-IMF bailout.
However, Mr Gilmjore insisted: “The target is expressed as a percentage of GDP and that target for 2014 is 5.1 per cent. We have met all of the targets that have been set,” said Mr Gilmore, who reiterated the Government’s commitment to reducing the deficit to 5.1 per cent next year and 3 per cent in 2015. Mr Gilmore did not put a figure on it but it is estimated that his way of calculating the adjustment would be at least €500 million less thatn the €3.1 billion figure.
Mr Gilmore said: "The targets have never been expressed as a quantum of money. If for example it were to take more than €3.1 billion to reach 5.1 per cent this year would Mr Regling or anybody else still be saying you do €3.1 billion. No they would not. They would be saying you have to do whatever it is to reach the 5.1 per cent. So if we find ourselves in a situation that it takes less than the €3.1 billion to reach the 5.1 per cent then that is what I believe we should do," said Mr Gilmore.
Promissory note agreement
He added that the dividend from the promissory note agreement deal amounted to around €1 billion a year and that would provide some scope for flexibility in the next budget.
“I believe we are entitled to use that dividend in our budget calculations. How we do so is a matter for negotiation between the government parties.”
Mr Gilmore said his personal view was that hard-pressed families had taken a very big burden and he had in mind some initiatives to provide some relief for them. He also said he was in agreement with the Minister for Social Protection who has publicly stated her opposition to meeting the saving of €440 million in her Department’s budget agreed with the Troika for next year.
“We have always said we have had to reduce our deficit but we have to do so in a way that maintains a threshold of decency for people who are in poor circumstances and for people who are down on their luck. We have endeavoured to do that in previous budgets and we will do so again this year,” added Mr Gilmore.
In yesterday's Irish Times Klaus Regling, managing director of the European Stability Mechanism (ESM) was emphatic that adhering to the €3.1 million target for next year was necessary. He also noted any application by Ireland for a precautionary credit line from the rescue fund as it exits the bailout would have to be approved by the euro zone's 17 finance ministers. "If the agreed target were not reached I'm sure that would not be well received," he said.
