GNP growth and public borrowing
Barry asked how reduced borrowing and rising remuneration and debt repayments would affect GNP growth in 1979 and 1980. The Minister said maintaining 1978 borrowing levels would not itself raise growth above the White Paper projections; the planned borrowing reduction was part of a strategy to curb inflation and promote growth and employment. Keating requested that he speak louder, and the Minister agreed.
asked the Minister for Economic Planning and Development the amount by which the growth of GNP in 1979 and 1980, that would be achieved if borrowing remained at the 1978 level, expressed as a percentage of GNP, and at 1978 rates of remuneration and repayment of borrowings, will be reduced in consequence of the projected cut in borrowing, expressed as a percentage of GNP; and the projected rise in remuneration and repayment of borrowings in those years.
Comment on this
I do not consider that of itself the maintenance of the 1978 public sector borrowing level as a percentage of GNP in 1979 and 1980 would result in GNP growth rates higher than those set out in the White Paper, National Development 1977-1980.
The gradual reduction in the public sector borrowing requirement as a percentage of GNP over the three-year period 1978-80 forms part of an overall strategy for reducing inflation and achieving rapid growth and employment during that period. Since it is envisaged that private sector investment and employment growth will make a greater contribution to expansion in 1978 and later years, it would be inappropriate to maintain the same level of debt-financed expenditure by the public sector.
Economic and monetary policy will be geared to offset any dampening effect on the growth process of the projected rise in remuneration of public debt and repayment of borrowings in 1979 and 1980.
