AN OIREACHTAS committee has said that greater EU scrutiny of the Republic’s scale of borrowing and the size of its budget deficits should be welcomed.
A report compiled by the Joint Oireachtas Committee on European Affairs, published yesterday, argued that there was a clear case for reform of the EU’s Stability and Growth Pact, even before the global downturn and financial crisis.
It added that the current European economic crisis made it very likely that the pact would be reformed and it suggested that a national fiscal council should be set up to provide independent forecasts for growth and government revenue.
The report’s author, Fine Gael Senator Paschal Donohoe, said the impending reform of the pact would have massive implications for Ireland and its economy.
While the report found that the reforms currently proposed fell short of properly establishing measures to engender economic success, Ireland had absolutely nothing to fear from any changes, he said.
“On the contrary, new rules restricting the limits on current borrowing requirement and structural deficit budgets can only have a positive impact on this country, as these matters have caused huge problems for us.”
Mr Donohoe said Greece was an example of the disastrous outcome of lax attitudes towards public finances and how it could spread to other countries, including Ireland. “While there are certainly failings in the upcoming changes to the pact, which must be addressed before they are finalised, Ireland should welcome its arrival,” he added.
“We are painfully experiencing the fall-out from slack fiscal rules, so an update is required urgently.”
