Ireland's draft budget for 2016 is "broadly compliant" with Europe's fiscal rules, the European Commission has said.
But it noted that there was a risk of “some deviation” from the expenditure benchmark for 2016, and said once more that windfall gains should be used for debt reduction.
The findings were contained in a review of thedraft budget proposals of Member States.
The Government was obliged under the Stability and Growth Pact (SGP) to bring the deficit below 3 per cent of GDP this year. The budget was predicated on a year-end deficit of 2.1 per cent, with the Government benefitting from a surge in tax revenues.
“The commission notes that the extra government spending announced for the last three months of 2015 comes at a time when the Irish economy is already growing at exceptionally strong rates,” the report said.
"The commission is also of the opinion that Ireland has made some progress with regard to the Country Specific Recommendations issued by the Council in the context of the 2015 European Semester relating to fiscal governance and invites the authorities to make further progress," the report said.
Elsewhere in Europe, the commission said four countries were in danger of breaching the fiscal rules, with Italy, Lithuania, Austria and Spain named.
Spain has come under scrutiny over its fiscal plan, which was approved by Spanish prime minister Mariano Rajoy using his overall majority in the parliament. The administration faces criticism from the opposition and the Brussels-based commission ahead of a general elections due December 20th in which the conservative leader is attempting to use the government’s economic record to secure re-election.
The commission said in its latest assessment released Tuesday that the current budget plan poses a non-compliance risk to the EU’s excessive-deficit ceiling of 3 per cent of gross domestic product. The commission also said Spain would not comply with the recommended fiscal effort, calling for a new amended version to be submitted as soon as possible.
Spain’s shortfall was described as one of the “largest” differentials among euro-area nations.
France might also not meet some of the fiscal targets set out by EU finance ministers. The commission said, however, that the costs of Europe’s migrant and refugee crisis would be treated as a special case.
Additional reporting: Agencies
