Irish 2016 budget deficit revised up slightly to 0.7 percent of GDP

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Irish 2016 budget deficit revised up slightly to 0.7 percent of GDP

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DUBLIN (Reuters) – Ireland’s budget deficit at the end of 2016 was revised up on Wednesday to 0.7 percent of gross domestic product from an estimate of 0.6 percent, still beating the government’s target of a reduction to 0.9 percent.
Ireland, whose deficit ballooned into double figures in 2009, leading to a three-year international bailout, aims to cut the gap between spending and revenue to 0.4 percent of GDP this year as it moves towards its first balanced budget in a decade.
The minor revision was made after GDP growth for 2016 was revised to 5.1 percent from 5.2 percent last week, when the state’s statistics office also began to phase in a new set of data to measure Ireland’s open economy.
“Modified Gross National Income” – or “GNI*” – strips out the distorting impact of Ireland’s status as a hub for major multinationals on the conventional measure for economic growth. It puts the size of the rapidly growing economy nearly one-third smaller at 189 billion euros.
That meant the budget deficit at the end of last year was even higher, at 1 percent of GNI*, but still significantly lower than the previous year’s 2.9 percent of GNI*.
The new measure was introduced in response to GDP data for 2015, when growth was adjusted to 26 percent after a massive revision to capital asset stocks. That cut Ireland’s debt-to-GDP below 80 percent from 94 percent at the stroke of a pen.
Ireland’s debt as a percentage of GNI* stood at 106 percent at the end of 2016 compared with 73 percent of GDP, last week’s data showed. In a presentation to investors published on Tuesday, Ireland’s debt agency said the “reality was somewhere in between.”

(Reporting by Padraic Halpin, editing by Larry King)

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