Yahoo Finance Budget watchdog criticises Irish government for repeating past mistakes
Ireland’s leading budget watchdog has issued a strong rebuke of the government over the public finances, warning it was repeating the mistakes of the past and leaving the country “more exposed to adverse shocks” than necessary.
“Failure to prevent unplanned spending increases has meant long-lasting in creases in spending that are difficult to reverse and that represent a repeat of the policy mistakes of the past,” the Irish Fiscal Advisory Council said.
In its latest fiscal assessment report, which reviews the country’s recent budget, the watchdog noted that the Irish government in October committed to spending €1.1bn (£973m) more in 2019 than it had said it would only four months earlier.
This, it added, was thanks to €700m (£619m) in additional health spending and was “not consistent with prudent budgetary management.” Health spending, it said, should instead be funded by an increase in taxes or spending cuts in other areas.
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The report accused the Irish government of repeatedly making similar unplanned spending increases, which have in turn left the country’s finances in deficit rather than surplus and “more exposed to adverse shocks.”
While it commended progress on economic forecasting and said Ireland’s short-term outlook “remains strong,” the report added that that the country’s medium-term economic planning was “not credible” and “unrealistic,” and that “a slowdown in coming years is inevitable.”
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It pointed to repeated upward revisions to spending limits and said that the recently created rainy day fund would likely prove insufficient if this continued.
Though Ireland had previously committed to meeting the European Union’s fiscal targets, the report pointed out that even the Irish government’s own estimates suggest that the country will breach the rules in 2018 and 2019.
