Ireland to increase capital spending among highest levels in OECD

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DUBLIN, Oct 4 (Businesshala) – Ireland outlined a 10-year 165 billion euro ($192 billion) capital plan on Monday, with the country’s fiscal watchdog saying public investment was among the highest levels in the OECD. will take one, but will also take the risk for it. High debt economy.

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The government decided in July to sharply cut its budget deficit during the COVID-19 pandemic, more slowly than it plans to increase spending in stressful sectors such as health, climate change and especially housing.

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The plan announced Monday would increase government capital spending to 16.4 billion euros in 2030, up from 9.8 billion euros this year and 3.4 billion euros in 2013, when it slashed investment in Europe to one of the lowest rates since the global financial crisis. had gone.

This means that public investment will grow every year above 5% of national income from 2024 until the end of the decade, the government said.

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About a third of the funding will go to housing by 2025, and 21% will favor public transport over road construction in a 2:1 ratio for transport projects. Health and education account for the other 17% of the available funds.

The Irish Fiscal Advisory Council (IFAC) – which last month warned the government’s budget plans were “at the limit of prudence” – said an increase in capital spending should help to overcome hurdles while taking advantage of lower interest rates.

However it said it was not without risk.

“The rapid pace of investment and the fact that it comes with a rapid increase in current spending and some tax cuts carries risks. Capacity constraints in manufacturing could also increase the cost of increased investment,” IFAC said on Twitter, highlighting the country’s high debt levels.

Ireland’s public debt ratio rose to 104.8 per cent of the revised gross national income at the end of 2020, up from 94.7% in 2019.

The finance ministry predicted in July that it would stand at 106% rather than return to pre-pandemic levels in 2025, although ministers have indicated it will be lower than that due to the pace of Ireland’s economic recovery. ($1 = 0.8603 euros) (Reporting by Pedric Halpin; Editing by Alison Williams)

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