Ireland may not have the political will to bring its budget deficit in line with EU rules as planned by 2014 and could need six years more, the chairman of the smaller governing coalition party the Greens said.
Investors and European leaders have praised Ireland for austerity measures culminating in 4 billion euros ($5.2 billion) of spending cuts imposed in last December's budget for 2010.
Green Party Chairman Dan Boyle told the Sunday Tribune it was probably a heresy for a government party to question whether the deficit could be cut to 3 percent of gross domestic product by 2014 from more than 14 percent in 2009.
It is certainly doable if you want to be draconian every year, Boyle was quoted by the newspaper as saying. But is it politically feasible and is it socially possible?
Boyle said he still expected the cabinet to deliver the 3 billion euros of savings planned for the 2011 budget in December and then the government could take stock.
I do not see the public appetite continuing, Boyle said. It could be that we have neutral budgets for a period.
Boyle said he was making his comments in acknowledgement of a report by the International Monetary Fund, which expressed doubts over Ireland's ability to meet the 2014 target.
The Green Party last year debated quitting the alliance with Prime Minister Brian Cowen's Fianna Fail party due to the strains of the fiscal tightening and bank rescue programme, but its members ultimately decided to stay on board.
BANK BAILOUT COSTS
In a talk show on public radio RTE on Sunday, Boyle said the next parliamentary election -- due in 2012 if Cowen can keep the coalition in place until then -- would provide an opportunity to debate possibly extending the 2014 fiscal target.
We have to honor the commitment to the three billion (in savings) in 2011, he said.
I think we will have a debate maybe when the general election happens about whether 2014 is the year, whether it could be 2015, 2017, 2020, that we should measure the pain over a longer time period.
Cowen and Finance Minister Brian Lenihan, main architect of the reforms and also from Fianna Fail, have been adamant Dublin must stick to austerity measures and meet the 2014 deadline.
Asked about Boyle's remarks, a spokesman for Lenihan confirmed the official budget target remained 2014. He did not comment further.
If Ireland loosened its budget discipline, it could cause a flight of investors who already demand a hefty premium for holding Irish sovereign bonds. A row over fiscal policy could also destabilize the already fragile coalition.
(For an earlier analysis on Cowen's survival prospects as PM please click)
So far, Green ministers have supported the reforms. Boyle is chairman of the party and a member of the upper house of parliament, but not a member of the cabinet.
The budget deficit has risen partly due to the cost of rescuing banks, chiefly nationalized Anglo Irish Bank. The bank costs last year gave Ireland the biggest deficit per GDP in the EU and could push the 2010 deficit as high as 20 percent.
Boyle said he also expected the state to raise its minority holding in another lender, Allied Irish Banks to a majority of up to 70 percent.
(Editing by Mark Heinrich)