Fianna Fáil Spokesperson on Finance, Michael McGrath TD has welcomed the Cabinet decision to bring forward legislation to establish the Rainy Day Fund on a statutory basis.
Deputy McGrath commented, “Fianna Fáil was the first party back in 2015 to propose the establishment of a Rainy Day Fund. We did so because it makes sense to have resources put aside which can be deployed when the economic cycle takes an inevitable turn for the worse at some point in the future. We have to ensure that when difficult times come again, the first decision the government of the day does not have to be to raise taxes or cut spending on vital public services.
“The establishment of a Rainy Day Fund was negotiated into the Confidence and Supply Agreement by Fianna Fáil and, in the Summer Economic Statement in June 2016, the Government committed to the establishment of such a fund. The idea has been endorsed by the European Commission, the Irish Fiscal Advisory Council and recently by the International Monetary Fund.
“I, and my colleagues in Fianna Fáil, have consistently made the point that we live in a very uncertain world and, as a small open economy, we are particularly vulnerable to global economic changes that are beyond our control. Establishing a Rainy Day Fund is the responsible thing to do when the economic tailwinds are positive.
“There are substantial risks lurking out there and we need to be prepared for all eventualities. Brexit is chief among them but we also face the risk of a trade war between Europe and the United States and a move towards protectionism. The European Central Bank will soon begin to unwind their quantitative easing program which will push bond yields higher and there is also a risk our corporation tax base will be eroded.
“It is vital now that this Fund is designed in a manner that dovetails with the fiscal rules in a workable manner. We have already made proposals in this regard and will engage constructively when the legislation is introduced in the Oireachtas.
“The Rainy Day Fund is a key part of the Confidence and Supply Agreement and as we move towards Budget 2019, Fianna Fáil will be seeking progress on the objectives set out in that Agreement to ensure this Budget 2019 is a progressive one that moves us towards a fairer Ireland”, concluded McGrath.