2014-04-22 - Socio Economic Review 2014 - Full text and cover - FINAL

about the impact of the rapid pace of fiscal consolidation on Ireland’s economy than
other members of the Troika, and were supportive of Ireland’s efforts to gain relief
on legacy banking debt, particularly given the IMF’s general fear that IMF financing
was being used to delay reforms to the Euro area’s banking system.
Table 2.5 – Comparison of IMF Programme Assumptions in 2010 and 2013
December 2010 IMF December 2013 IMF Deficit
Target/Deficit
out-turn
Real Real Fiscal Real Real Fiscal
GDP GNP Consolidation GDP GNP Consolidation
(€bn)**
(€bn)
2011 0.9 -1.5 6 2.2 -1.6 6 -13.1%
2012 1.9 0.8 3.6 0.2 1.8 3.8 -8.2%
2013 2.4 1.4 3.1 0.3 0.2 3.4 -7.3%
2014 3 2.3 n/a 1.7 1.3 2.5* -4.8%
2015 3.4 3.4 n/a 2.5 2.1 2*** -2.9%
Source: Department of Finance (2010; 2013a); International Monetary Fund (2010; 2013).
Notes: *Budget 2014 was composed of €2.5bn in permanent measures and €0.6bn in onceoff
measures.
**Budgetary adjustments agreed in second review.
***IMF Staff assume €2.4bn adjustment is required to reach deficit target (IMF, 2013: 15).
Despite considerable latitude in the division of cuts to tax increases, successive
governments pursued a fiscal consolidation consisting of two-thirds expenditure
cuts to one-third tax increases. Some Troika officials, citing the ESRI, have stated
that the overall fiscal adjustment in budgets between 2009 and 2014 has been
progressive (Szélsky & Florián, 2013). However, the progressivity is affected by the
€9.6bn of measures – included public sector pay cuts - announced in 2009, 50% of
which were tax cuts. The ESRI has shown that budgets introduced between 2010 and
2014, including the three budgets introduced under the ministrations of the Troika,
were in fact regressive, taking more as a percentage of income from those on lower
incomes (Callan et. al., 2013; Callan, 2013). Moreover, measures of the distributional
impact of successive budgets do not capture the effects of reductions in expenditures
on service provision – such as, for example, health, education or services for the
homeless - upon which those on lower incomes, or in vulnerable positions, are more
likely to rely.
2. From Crisis to Viable Future Pathway 31