THE MOST RECENT budget showed ‘an absence of a plan’ for beyond 2015.
That is the finding of the Fiscal Advisory Council (FAC), the government’s own independent budget advisor, says that the government should have pressed ahead with plans to cut €2.1 billion in last month’s Budget.
The council had urged the government to go ahead with a planned Budget adjustment, but the government instead opted for a neutral budget with some small tax cuts and no major spending decreases.
In its seventh Fiscal Assessment Report, the FAC says that while the government is making progress on the issues of the national deficit and debt to GDP ratio, its feels the Budget was a “missed opportunity”.
“Budget 2015 reflects a missed opportunity to move the public finances more decisively into a zone of safety by following through on previous plans,” it says.
“The deficit is projected to be more than one percentage point higher in 2015 than could have been achieved if previous plans had been implemented.
“All else being equal, the larger deficits result in the debt level being roughly €10 billion higher in 2018 than if previous plans had been adopted.”
The FAC called for medium-term planning to guard against a boom-bust cycle and said that in the long-term, the government needs to plan more effectively.
“Budget 2015 was marked by an absence of a well-specified plan for the public finances beyond 2015. Published tax revenue projections assume no change in policy despite Budget commitments to lower taxes in the coming years,” its report adds.
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