THE switch to multi-year budgeting is necessary although it may create difficulties, the Minister for Finance, Mr Quinn, said yesterday. He added the Government expected a current budget surplus of £200 million to be recorded this year.
Mr Quinn told the Association of European Journalists the new, multi-year budgeting system would mean establishing three-year projections for all the budgetary aggregates on the basis of existing levels of services, programmes and tax rates. These would be used as a benchmark for the formulation of future budgetary policy.
It would take account of the impact of setting targets and decisions in 1997 on the budget position for 1998 and 1999, he added.
He said that no previous government had done this, and by making such information available the Government was making itself more accountable.
Pressed on his decision to have two budgets next year - the extra one as part of the transition - Mr Quinn insisted that he was not engaging in a politically-motivated ploy.
"I don't know who is going to be in power this time next year - it may very well not be the present administration. But the need for this administration to go to a budget that concludes in the late autumn of Year One for the financial year of Year Two is incontestable. And the thinking behind the two-budget transition period is purely that and nothing else," he said.
The 1996 budget targets for the main aggregates would be met by
"a very safe margin", he said. Exchequer borrowing and the national debt would be significantly below their targets, and a current budget surplus of £200 million was anticipated, after adjustments, compared to a target deficit of £82 million.
"The debt-GDP ratio, on a Maastricht basis, is expected to fall to something around 76 per cent, compared with 81.6 per cent at the end of 1995," he added
The Minister said that the forthcoming budget "must address the pressure for tax reductions and for increases in social spending in a balanced way", but would have to ensure that borrowing was constrained and that the debt-GDP ratio fell significantly in the quest for EMU qualification.
Mr Quinn said he was delighted that there was a debate about the effects of EMU membership on the Irish economy, but reiterated his view that the Government did not have the right to opt out of the single currency, even if it wanted to. The treaty, he added, was ratified by the people.
He added that he expected Britain to join by the year 2002 at the latest.