€400m in extra taxes needed, Advisory Council predicts
The Irish Fiscal Advisory Council has today warned that a further €400m in taxes or cuts may be needed to meet this year's debt targets.
The Government's economic advisors said that there remains a question mark over whether the target of 8.6% can be met this year, because of a slump in economic growth.
The Council stated in its Fiscal Assessment Report for April 2012 that there is significant uncertainty about the more medium and longer term growth prospects, making it difficult to project if budgets out to 2015 can achieve the debt targets.
"Budget 2012 involved a consolidation package of €3.8bn, with €3.2bn in new tax and expenditure measures aimed at achieving a General Government deficit target of 8.6% of GDP this year," the report stated.
"This adjustment package was higher than had been initially planned in last April’s SPU [Stability Programme Update] (€3.6bn) and reflected, in part, a weaker outlook for growth. The need for larger fiscal adjustment to meet existing targets had been signalled prior to the Budget in the Council’s first assessment report (IFAC 2011).
"For 2013 to 2015, the broad consensus across official forecasters projects a fall in the General Government deficit to GDP ratio to approximately 3% in 2015.
"These forecasts take into account the sharp rise in interest expenditures from 2013 onwards, partly due to the ending of the interest holiday on the promissory note issued by the Government.
"The gross debt to GDP ratio will remain elevated and is expected to peak in 2013 at 119% of GDP."
