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Ireland Meeting Economic Targets

by Jason Gorringe,, London

05 September 2011

While current economic data suggests a mixed picture for the country's finances, Irish Finance Minister Michael Noonan has said that many aspects of the government's plans for recovery are on track..

Speaking to the parliamentary Committee on Finance, Public Expenditure and Reform, Noonan said that Ireland is experiencing a broad-based recovery in exports and improvements in price and cost competitiveness. On the other hand, domestic economic activity - namely consumption and investment - remains weak, with domestic spending declining. Therefore, Ireland is unlikely to see domestic demand driving growth in the short-term: growth will be bolstered largely by exports.

From the governmental side of things, Noonan said that tax revenue is essentially on target, net voted expenditure is under control, and this year's 10% deficit target remains on track. The Comprehensive Review of Expenditure will conclude imminently, and Noonan will publish a Pre-Budget Outlook in October, which will set out medium-term fiscal consolidation plans to take Ireland's economy through 2012-15. He said that: "I believe it is important that we provide as much clarity as possible regarding future consolidation in order to generate certainty and thereby enable households and firms to plan their spending and investment decisions."

Noonan added that progress has been made in the crucial area of banking, with a view to stabilizing the system through a focus on restructuring and renewal, recapitalization, deleveraging, funding and credit provision. Ireland is also on track to meet the commitments outlined under the European Union/International Monetary Fund bailout programme, with the next review mission scheduled for October. The government is currently discussing the precise application of changes to interest rates and loans secured earlier in the year.

In spite of the government's achievements thus far, Noonan was clear that complacency cannot be afforded. Challenges remain, with spending cuts and revenue increases needed in future budgets. He stressed that: "We must build on this positive momentum and ensure that we continue to get ourselves back on track."

TAGS: tax | economics | Ireland | fiscal policy | banking | budget | International Monetary Fund (IMF) | European Union (EU) | Europe

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