asked the Minister for Finance if he will make a statement on the latest quarterly reports of the Central Bank and the ESRI in so far as these reports relate to the public expenditure targets of the Government for 1989.

The Central Bank report states that, while progress in fiscal adjustment has undoubtedly been made in 1987 and 1988, a considerable degree of adjustment is inevitable in future years. While the ESRI report tends to be over-optimistic in its assessment of the prospective opening budgetary position for 1989, it too accepts that the borrowing requirement needs to be reduced further.

The best advice available to me is that a further budgetary adjustment, involving sizeable expenditure cuts, and probably of the same magnitude as in 1988, will again be required in 1989. Obviously, economic and financial trends, both at home and abroad, will have a bearing on the level of adjustment eventually required. Nevertheless, it would be unrealistic to expect that these will substantially mitigate the scale of adjustment needed to continue to make satisfactory progress towards achieving the targets set out in the Programme for National Recovery for stabilising the Debt/GNP ratio.