COUNCIL OPINION of 18 January 1999 on the stability programme of Ireland, 1999-2001
Date: 1999-01-18
Institutions: Council of the European Union
Subjects: Ireland, budget policy, economic policy, economic stabilisation

C  42/4

EN

Official  Journal  of  the  European  Communities

17.2.1999

COUNCIL  OPINION

of  18  January  1999

on  the  stability  programme  of  Ireland,  1999(cid:220)2001

(1999/C  42/03)

THE  COUNCIL  OF  THE  EUROPEAN  UNION,

Having  regard  to  the  Treaty  establishing  the  European
Community,

Having  regard  to  Council  Regulation  (EC)  No  1466/97
of  7  July  1997  on  the  strengthening  of  the  surveillance  of
budgetary  positions  and  the  surveillance  and  coordi(cid:220)
nation  of  economic  policies(cid:216)(˛),  and  in  particular  Article
5(1)  and  (2)  thereof,

Having 
Commission,

regard 

to 

the 

recommendation  of 

the

After  consulting  the  Economic  and  Financial  Committee,

HAS  DELIVERED  THIS  OPINION:

On  18  January  the  Council  examined  Ireland’s  Stability
Programme,  which  covers  the  period  1999(cid:220)2001.  The
Council  notes  with  satisfaction  that  the  Irish  government
financial  balance  moved  into  surplus  in  1997  and  is
expected  to  remain  in  surplus  throughout  the  programme
period  while 
is
expected  to  have  fallen  below  60(cid:216)%  of  GDP  by  the  end
of  1998,  will  continue  to  decline.

the  government  debt  ratio,  which 

it  is  clear  that  the  healthy  budget  outturn  of  1998  means
that  Ireland  already  fulfils  the  Stability  and  Growth  Pact
objective  of  a  budget  balance  close  to  balance  or  in
surplus.  Moreover,  the  scenario  for  the  public  finances
envisages  Ireland  continuing  to  meet  the  budgetary
requirements  of  the  Stability  and  Growth  Pact  over  the
period  1999  to  2001.

While  it  is  clear  that  the  programme  complies  with  the
Stability  and  Growth  Pact,  there  are  nevertheless  several
in  the  wider  context  of  macro(cid:220)
issues  to  be  raised 
economic  stability.  In  particular,  the  Council  notes  that
the  economic  situation  is  not  without  risk;  the  main  risk
is  of  an  overheating  economy  with  rising  wages  and
prices.  In  this  respect  the  Council  noted  that  while  there
has  been  some  tightening  of  fiscal  policy,  a  greater
tightening  would  have  been  more  prudent.  The  Council
Recommendation  of  6  July  1998  on  the  broad  guidelines
of  the  economic  policies  of  the  Member  States  and  of
the  Community(cid:216)(ˇ)  for  1998  advocated  a  tight  fiscal
policy  in  Ireland.

strong  growth 

the  background  of 

Against 
the
economy  the  Council  believes  it  to  be  appropriate  that  a
budget  surplus  is  maintained,  as  envisaged,  throughout
the  programme.  In  keeping  with  the  requirements  of  the
Stability  and  Growth  Pact,  this  should  permit  a  sufficient
safety  margin  to  avoid  excessive  deficits  in  the  event  of  a
cyclical  downturn.

in 

in 

framework  presented 

The  macroeconomic 
the
programme  foresees  economic  growth  declining  from  the
very  high  level  recently  achieved  while  inflation  also
its  1998  peak.  Nevertheless  growth
decelerates  from 
remains  at  very  high  levels  compared  to  other  Members
reflecting  the  excellent  supply  side  performance  of  the
economy  and  a  continued  growth  in  the  labour  force.
The  Council  considered  the  macroeconomic  projections
In  addition,
in 

to  be  attainable. 

the  programme 

investment  both  to  meet  the 

The  Council  supports  the  programme’s  emphasis  on
increasing  public 
infra(cid:220)
structural  needs  of  a  strongly  growing  economy  and  to
replace  the  expected  reduction  of  Community  Structural
Funds  in  Ireland.  A  more  detailed  capital  investment  plan
would,  however,  be  a  useful  adjunct  to  the  Stability
Programme  and  could  help  to  avoid  supply  constraints
which  could  affect  the  prospects  for  growth  and  inflation
in  Ireland.

(˛)(cid:217)OJ  L  209,  2.8.1997,  p.  1.

(ˇ)(cid:217)OJ  L  200,  16.7.1998,  p.  34.