Irish budget to produce longer-term savings

By @ibtimes on

Over one-quarter of Ireland's almost 5.5 billion euros in planned expenditure savings for the period 2013-15 will arise from policy steps to be announced in next week's budget for 2012, government documents showed on Tuesday.

Ireland will outline on Monday the breakdown of 1.45 billion euros of expenditure savings planned for next year, detailing how much it will save through cutting public sector workers by 7,000, reforming its social welfare system and reducing costs in other departments.

The continued savings on the public sector wage bill and from entitlement reforms in social welfare will be substantial and account for the over one-quarter of savings to 2015, according to the updated memorandum of understanding between Ireland and its creditors, published on Tuesday.

A draft version of the memorandum, first obtained by Reuters, was leaked by German lawmakers earlier this month and caused a political storm as it detailed budgetary plans -- including an increase in sales tax -- not yet announced by the government.

The draft did not detail the carryover effects of planned expenditure savings but it did note that Ireland hoped to raise 670 million euros from next year's two percentage point sales tax hike, a figure not included in the signed version.

The updated memorandum also said that the additional cut in public sector numbers of 11,500 -- confirmed by government this month -- together with efficiency and equity-enhancing social welfare system adjustments, as well as contributions from other non-pay programmes will deliver the remaining new 2013-15 savings.

Under the terms of its EU/IMF bailout, Ireland has pledged to make budgetary adjustments of 12.4 billion euros between 2012 and 2015 to push its budget deficit below 3 percent of gross domestic product by the end of the process from an estimated 10.3 percent this year.

(Reporting by Padraic Halpin; editing by Stephen Nisbet)

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