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Ireland delivers 2014 budget to make spending cuts, tax increases

16 October 2013 01:25 (UTC +04:00)

Baku-APA. Ireland on Tuesday delivered its 2014 budget to make spending cuts and tax increases, amounting to 2.5 billion euros (3.4 billion U.S. dollars), 600 million euros less than the original target, APA reports quoting Xinhua.

"The purpose of this budget is to continue the progress we have made; to reinforce policies that grow the economy; to establish the conditions which will create jobs; and to prepare for exiting the bailout program," Irish Finance Minister Michael Noonan said.

The key points of the new year's budget include: 35,000 pensioners to move from medical card to GP-only card; jobseeker's allowance for those under 25 cut to 100 euros; 10-euro cut in child benefit for fourth and subsequent child; home renovation tax incentive scheme to be introduced; corporation tax rate to remain at 12.5 percent.

They also include 10 cents increase on 20 cigarettes; 10 cents on pint of beer and 50 cents on 75cl bottle of wine; 9 percent VAT rate in tourism sector to continue; free GP care for under fives; new 41 percent higher single rate for DIRT on savings; air travel tax to be gone from April 1; telephone package for elderly to be scrapped.

In a speech to parliament, Noonan said the forecast deficit is 7.3 percent for 2013, 4.8 percent for 2014 and 2.9 percent for 2015. "We have beaten our deficit target during each year of our program, and a deficit at 4.8 percent will beat the target again next year," he said.

Noonan said his department is forecasting Ireland's GDP growth of 0.2 percent this year, strengthening to 2 percent next year.

Ireland's debt is forecast to peak at 124 percent of GDP at the end of this year, according to Noonan. "This debt ratio is very high and reducing it must be a key priority," he said.

"I would stress that one reason for the current high debt ratio is the policy decision to ensure that the State is well funded as we leave the EU/IMF Program," he added.

According to Noonan, Ireland's debt ratio will move onto a downward path from next year onwards, to 120 percent at end-2014, 118.4 percent at end-2015 and 114.6 percent at the end of 2016.

"This downward momentum will further enhance market confidence in Ireland," he said.

He said his country will be the first eurozone country to exit an EU-IMF program of this type, adding that Ireland expects to exit bailout program by Jan. 1, 2014.

"By the time the majority of the measures that I have announced today become law on the first of January next, I am confident that Ireland will have left the EU/IMF program," Noonan said. (1 euro = 1.35 U.S. dollars)