DUBLIN Oct 12 Ireland's 2017 budget goes beyond
the limit of prudent policy, the country's fiscal watchdog said
on Wednesday after the government announced a 1.3 billion euro
($1.46 billion) package of spending increases and tax cuts.
The measures appear to break European Union budgetary rules,
but not by a significant enough margin to justify fines, the
head of Ireland's Fiscal Advisory Council John McHale said.
Finance Minister Michael Noonan on Tuesday announced the 1.3
billion package of tax cuts and spending increases, increasing
an earlier estimate that the government would have 1 billion
euros to spend in the budget.
That extra 300 million euros plus an extra 300 million euros
of resources for 2016, also confirmed on Tuesday, means the
government will inject 3 billion euros of new resources into the
economy in 2016-17 up from an earlier estimate of 2.4 billion,
"We see that as beyond the limit of 2.4 billion which we saw
itself as being the limit of prudent policy," McHale told state
The budget indicates the government will reduce its
structural deficit -- a measure that strips out business cycle
effects and one-off revenue and spending -- by 0.3 percent next
year rather than the 0.6 percent improvement demanded by EU
rules, McHale said.
He said it also exceeded EU rules on allowable expenditure
growth by 200 million euros.
"These breaches are not large enough - at least on current
projections - to bring fines from the EU. But they still are
breaches of the rules," McHale said.
Noonan on Tuesday described the budget as representing
"prudent fiscal policy" and said he expected the country's
budget deficit fall to 0.4 percent of GDP in 2017 from a deficit
of 32 percent when he took office in 2010 in the middle of the
country's financial crisis.
Deputy Prime Minister Frances Fitzgerald told RTE that the
department of finance did not agree with the Fiscal Advisory
($1 = 0.8928 euros)
(Reporting by Conor Humphries; Editing by Toby Chopra)