Written Answers - Fiscal Policy

Wednesday, 22 February 2012

Dáil Éireann Debate
Vol. 756 No. 3

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  91.  Deputy Bernard J. Durkan  Information on Bernard Durkan  Zoom on Bernard Durkan   asked the Minister for Finance how it is intended to ensure compliance throughout  Information on Michael Noonan  Zoom on Michael Noonan   the eurozone countries with the terms and conditions of the fiscal stab[748]ility compact in view of the experience of non-compliance with the previous Stability and Growth Pact; if provision is likely to be made for latitude in respect of the 0.5% debt-growth ratios contained in the compact in the event of it being expedient for one or more countries in certain circumstances to breach this restriction; and if he will make a statement on the matter. [10278/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan  Zoom on Michael Noonan  The Fiscal Compact requires that fiscal rules — covering targets for the structural balance, automatic correction mechanisms, etc — take effect in national law. This is an important provision as it encompasses greater ownership in ensuring the appropriate conduct of fiscal policies at national level. This is how compliance will be ensured. In terms of the deficit target, the structural deficit of each Member State will need to be at its country-specific medium term objective (MTO), and member states are required to ensure rapid convergence towards their MTOs. These requirements are in line with the revisions to the Stability and Growth Pact, contained in the so-called “six-pack” of legislative reforms. The timeframe for convergence towards the MTO will be proposed by the Commission taking into account country-specific sustainability risks. Member States can only temporarily deviate from their MTOs only in exceptional circumstances.

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