ESRI: State asset sale funds should pay debt, not stimulate economy
The Government has today been advised not to use the proceeds from the sale of state assets to try and stimulate the Irish economy.
The Economic and Social Research Institute (ESRI) said that such a move would have little effect, because most of the money would be spent on buying imported goods.
It stated that the money would be better used to pay off debt instead.
In its Quarterly Economic Commentary, the institute said that a fiscal stimulus should only be undertaken on a Europe-wide basis.
ESRI economist David Duffy said that the Irish Government should use the proceeds from the sale of state companies to reduce Ireland's debt.
"They should be primarily focused on reducing the debt," he said.
"We've a very high debt at the moment, and a significant amount of revenue and money goes towards servicing that debt,
"The sooner we can get that money [debt] down the sooner that that money [revenue] can be put to alternative uses."
The ESRI report also stated that despite economic progress being made in Ireland, our near term recovery is still tied to developments elsewhere, including uncertainties in the Eurozone.
It is now predicting growth of 0.6% in GDP terms this year but will remain unchanged in terms of GNP.
