Stephen asked the Minister for Finance:

if he accepts that compliance with the structural deficit rule, as stipulated in the Fiscal Compact, requires bringing the debt to GDP ratio to approximately 25%, as per the analysis by economist Karl Whelan, and if not, the reason therefor;

if not, the debt to GDP ratio he believes that will meet the structural deficit rule; and if he will make a statement on the matter.

Ref No: 21783/12

Karl Whelan’s analysis is here: http://www.karlwhelan.com/IrishEconomy/DebtRatios.pdf

Minister for Finance ( Mr Noonan) :  

There is no requirement to bring the debt to GDP ratio to 25 per cent.

The debt correction requirement in the Inter-Governmental Treaty on Stability, Coordination and Governance in the Economic and Monetary Union is to reduce that part of the debt ratio which is above the threshold rate of 60 per cent annually by at least one-twentieth of the difference between the actual rate and the threshold rate.

It is important to remember that this requirement is already part of the revised Stability and Growth Pact. We will have to fulfill this requirement irrespective of the Stability Treaty.

I am aware of the analysis published, which shows that on the basis of certain assumptions, including regarding the deficit in the public finances and nominal economic growth rates, public debt could converge to a low level in the long-run.