Finance Minister Michael Noonan has told an Oireachtas committee that recent weak figures from Ireland's main export markets had made it more difficult to forecast the outlook for the Irish economy.
He told the Committee on Finance, Public Expenditure & Reform that Ireland could not remain immune if the global economic recovery were to stall. The committee is beginning a series of meetings on the economy and the banks.
The Minister said exports were performing strongly, but domestic economic activity remained weak, and was unlikely to contribute to economic growth in the short-term.
He said the Department of Finance's current forecast was for GDP growth of 0.8% this year. The ESRI said this morning it expected 1.8% growth this year.
The Minister also said Exchequer figures due out tomorrow were likely to show a continuation of July's position, with tax receipts broadly in line with expectations.
The Minister for Finance also ruled out bringing forward the date of the Budget and said the stated scale of adjustment of €3.6 billion might "stretch out a bit". He said taxes would have to be increased in December's Budget, but there was a commitment not to raise income tax. He said the Government did not want to increases taxes which would cause further unemployment problems.
Debt forgiveness 'not realistic option'
Mr Noonan reiterated that the Government would consider new measures on mortgage debt once an expert group had reported by the end of this month. But he warned that the granting of extensive debt forgiveness was 'not a realistic option'.
He said debt forgivenss for everyone would result in a free-for-all. The Minister said resolutions must be found on a case-by-case basis through open engagement between the distressed borrower and the lender. Mr Noonan said the planned reform of bankruptcy and debt settlement arrangements were key elements in any consideration of potential policy options.
On lending to businesses, he said the Department of Finance would shortly commission an independent survey on demand for loans from small businesses. The Minister said credit demand for viable firms was needed to get the banks to hit their lending targets, but he warned that the Government had no intention of forcing banks to lend to firms that were not capable of repaying.
The Finance Minister said he did not have the authority to write to US officials to have David Drumm declared an illegal immigrant. He said that if the DPP decided there was a case to be taken against the former Anglo Irish Bank chief, extradition proceedings could then be put in place.
Mr Noonan was responding to a query from the Fianna Fáil senator Thomas Byrne, who described the former Anglo Irish Bank CEO as a "national embarrassment".
