This paper considers elements of macroeconomic policy central to Ireland’s objective of being among the first countries to enter into European Economic and Monetary Union. The paper analyzes the main determinants of the Irish pound/sterling exchange rate, an issue brought to the fore by the currency turbulence of March 1995, which saw a sterling-inspired decline in the Irish pound against the deutsche mark. It also considers fiscal developments and prospects, highlighting tax reform measures undertaken to accelerate job creation, the growth of spending in recent years, and the medium-term fiscal outlook.


This paper considers elements of macroeconomic policy central to Ireland’s objective of being among the first countries to enter into European Economic and Monetary Union. The paper analyzes the main determinants of the Irish pound/sterling exchange rate, an issue brought to the fore by the currency turbulence of March 1995, which saw a sterling-inspired decline in the Irish pound against the deutsche mark. It also considers fiscal developments and prospects, highlighting tax reform measures undertaken to accelerate job creation, the growth of spending in recent years, and the medium-term fiscal outlook.

II. Recent Budgetary Developments 1/

1. Introduction

Ireland’s budgetary position has improved dramatically since 1987. 2/ The double-digit deficits that prevailed in the first half of the 1980s were sharply reduced, largely owing to current expenditure restraint, declining interest rates, and robust growth (Chart 4). The annual Exchequer borrowing requirement (EBR) averaged 2¼ percent of GNP during 1987–94, while the heavy public debt burden—the legacy of past excess—was reduced from 125 percent of GNP to 94 percent over the same period as large primary surpluses were generated.



Citation: IMF Staff Country Reports 1995, 076; 10.5089/9781451818673.002.A002

Source: Department of Finance, Economic Statistics.1/ Budgeted.

The economic backdrop to rapid fiscal consolidation was exceptionally favorable, characterized by declining interest rates and rapid growth. Interest payments as a percent of GNP consequently fell during the period from 11.2 percent to 7.2 percent. Rapid growth also facilitated tax collection, and tax amnesties in 1988 and 1994 contributed to revenue surges and a broadening of the tax base that resulted in an average tax elasticity during the period in excess of 1. 3/

Since 1989, however, the restraint on current expenditure has been loosened. Non-interest current expenditure growth averaged 8½ percent during 1989–94, to increase from 26.6 percent of GNP in 1989 to 28.8 percent of GNP in 1994. In recognition of the need to reimpose spending discipline, the Government announced at end-1994 a commitment to contain non-interest current expenditure growth to 6 percent in nominal terms in 1995 and to an average of 2 percent in real terms during 1996–97.

A less fortuitous economic environment or slippage from the commitment to medium term spending restraint could derail further progress in improving the public finances. Such progress is necessary to permit additional reforms to the tax code aimed at reducing the disincentives to seek and create employment; reduce further the still heavy debt burden; create a margin to absorb a backlog of deferred and contingent liabilities; and prepare for the eventual decline of the large flows of European Union (EU) funds. Against this background, this chapter reviews the implementation of the 1994 budget, the main features of the 1995 budget, the policy objectives and budgetary impact of tax reform, the recent evolution of current expenditure, and the medium-term fiscal outlook.

2. 1994 budget and outturn

The 1994 budget was framed in the context of the social consensus that underpins an economic strategy whose key elements include: budgetary restraint; exchange rate stability; wage and price moderation; the development of infrastructure; and the promotion of investment and employment creation. It targeted an EBR higher than that achieved in 1993, largely reflecting an increase in capital borrowing (Table A16 and tabulation).

1994 Budget Outturn

article image

In the event, the 1994 outturn was better than budgeted, largely because a sharper-than-anticipated rebound in domestic demand generated strong revenue growth. A (small) current surplus was recorded for the first time since the 1960s, and the Exchequer debt-to-GNP ratio was rapidly reduced.

The fiscal outturn in 1994 benefitted from three one-off factors. First, past savings of IR£120 million (0.4 percent of GNP) in debt service payments generated by the National Treasury Management Agency (NTMA) were allocated to the 1994 budget. 1/ Second, the temporary income levy, which was discontinued at the end of the 1993/94 fiscal year, yielded IR£51 million (0.2 percent of GNP) in 1994. Third, tax amnesty proceeds of IR£238 million (0.8 percent of GNP) were received in 1994.

The comfortable budgetary position in 1994 facilitated the acceleration of expenditures and the deferment of receipts. On the spending side, expenditures scheduled for 1995 (of IR£ million, or 0.2 percent of GNP) to restructure the pension fund liabilities of An Post and Telecom Eireann were shifted to 1994. In addition, the budgeted capital infusion to Aer Lingus was doubled from IR£50 million to IR£100 million as planned transfers were moved forward from 1995. In the case of receipts, an asset sale (budgeted at IR£50 million) was deferred, owing to unfavorable market conditions and the lack of a pressing need for funds in 1994. In addition, IR£59 million in accumulated savings in debt service payments were withheld for application to the 1995 budget. The acceleration of payments and the postponement of receipts in the execution of the 1994 budget, which together represented about 0.7 percent of GNP, eased the framing of the 1995 budget.

a. Revenue

The 1994 budget aimed at reducing taxes on low incomes, while broadening the tax net. The main tax relief measures envisaged in the 1994 budget included: the abolition of the temporary 1 percent income tax levy introduced in 1993; increased personal allowances; the broadening of the standard tax band; the reduction of the employers’ contribution to pay-related social insurance (PRSI) on low incomes; and the introduction of exemptions from health, employment, and training levies for those on low incomes. A number of measures were introduced to expand the tax base: a tax amnesty was introduced to bring delinquents into the tax net; certain social welfare benefits were stripped of their tax exempt status; tax relief on mortgage interest and health insurance premiums was reduced; and the residential property tax was widened. In addition, certain excise duties were increased, and administrative improvements undertaken to improve compliance. Income tax and VAT rates remained unchanged. The overall impact of the revenue measures adopted in the 1994 budget was estimated at 0.5 percent of GNP.

Revenue exceeded the budget target by 3.3 percent (IR£357 million) to reach 36 percent of GNP, with virtually all sources of tax revenue ahead of budget targets (Table A21). Total tax revenue grew by 11.6 percent (or 9.2 percent net of tax amnesty receipts), compared with nominal GNP growth of 8.4 percent. The yield of excise and motor vehicle duties was well ahead of expectations, while corporation tax revenues also grew rapidly. The tax amnesty yielded IR£238 million (0.8 percent of GNP) and was applied to fund expenditures related to the restructuring of the post and telecommunications pension funds, and the deferred liabilities of the health agency.

b. Expenditure

Net current expenditure increased by 6½ percent in 1994, three quarters of the growth of nominal GNP, notwithstanding a decline in interest payments (Table A19). The main sources of expenditure growth were social services and public sector salaries and pensions. Current expenditure exceeded the budget target because of an acceleration of payments (IR£134 million versus IR£84 million budgeted) to the post and telecommunications pension funds, a shortfall in EU budgetary contributions, and an overrun on health expenditures. Exchequer capital borrowing (2.2 percent of GNP) also exceeded the budget (by IR£154 million, 0.5 percent of GNP), largely reflecting a delay in Structural and Cohesion Fund receipts from the EU (IR£124 million). Aer Lingus received IR£100 million in 1994, twice the amount budgeted to restructure past losses, with the excess funded by a surplus on Local Loan Fund receipts.

3. 1995 budget

The 1995 Budget

article image

The 1995 budget targets a higher EBR than in 1994, notwithstanding expectations for continued rapid output growth (tabulation above). Current expenditure, which is more restrained than in recent years, was budgeted to be held just within the 6 percent ceiling on non-interest expenditure announced by the Government. 1/ The budgeted growth in current revenue was modest, reflecting the nonrecurrence of tax amnesty proceeds realized in 1994, the abolition of the temporary income tax levy, and a number of tax reform measures aimed at reducing the deterrents to seek and create employment. Exchequer borrowing for current expenditure was budgeted to increase by 0.9 percentage points of GNP, while borrowing for capital purposes was slated to decline by 0.7 percentage points of GNP.

a. Revenue

Tax revenue was budgeted to increase by 3 percent (one third of the anticipated growth in national income), while non-tax revenue (mainly Central Bank surplus income) was expected to decline. Consequently, the total-revenue-to-GNP-ratio was slated to fall from 36.2 percent to 34.4 percent.

In addition to the one-off factors that boosted tax revenue in 1994, the sluggish pace of budgeted revenue growth is attributable to a number of discretionary revenue measures, whose combined impact in 1995 is expected to result in revenue losses of about ½ percent of GNP. 1/ The tax reform measures adopted in the 1995 budget focused on: increasing disposable income to preserve the consensus on promoting competitiveness through wage moderation; reducing the cost of employment creation, particularly at low income levels; and encouraging enterprise, particularly in the services sector. The tax code changes are expected to increase disposable income by 2-3 percent for those on low incomes, while reducing replacement ratios by 3-4 percent.

To improve the incentives to seek employment, a number of measures were adopted to increase take-home pay, particularly of low-income workers. General income exemption limits were increased by 2.8 percent; the personal allowance raised by 6.5 percent; the standard band widened by 8.5 percent; and allowances for employee PRSI were introduced. To reduce the replacement ratio, the 1995 budget initiated a process of shifting the basis for dependency allowances from employment to income status. As a first step in this regard, child benefits for the employed were increased, while those for the unemployed were left unchanged.

To promote enterprise and employment creation: the income threshold for the reduced rate (9 percent) of employer PRSI was increased from IR£9,000 to IR£12,000; the standard corporation tax rate 2/ reduced from 40 percent to 38 percent; the stamp duty on the transfer of property and shares between associated companies abolished; and tax incentives for small business, family firms, and the renewal of certain urban areas and traditional seaside resorts enhanced.

To broaden the tax base, the tax relief on covenants was curtailed. Covenants—largely used to shelter parental income by covenanting a transfer to fund the educational expenses of university-aged children—have been growing by one fifth annually. 3/ Covenants are now limited to transfers to elderly dependents and certain charities. In addition, the Government’s commitment to continue the phased reduction of mortgage interest and health insurance tax relief was confirmed. However, tax relief was extended to all tenants living in private rented accommodation.

There were also some tax increases, namely the deposit interest retention tax (from 10 percent to 15 percent), excise taxes on cigarettes, and the reduction in the allowance for full-rate PRSI contributors.

b. Expenditure

Gross current expenditure was budgeted to increase by about 6 percent in 1995, thereby declining as a percent of GNP from 44.3 percent to 43.3 percent. Interest payments and economic services were expected to increase as a share of gross current expenditure, while the share of spending on social services, infrastructure, and security was expected to decline. The major discretionary expenditure measures adopted in the 1995 budget are expected to increase spending by 0.6 percent of GNP in 1995 and by 0.9 percent over a full year. They include a 2½ percent in social welfare benefits at a cost of IR£56 million in 1995 and IR£111 million over a full year; increased child benefits of IR£34 million in 1995 and IR£104 million over a full year; and the abolition of university fees at a cost of IR£10 million in 1995 and IR£42 million over a full year. The public sector wage bill was budgeted to grow by 5.7 percent, with 40 percent of the increase accounted for by an expansion in the ranks of health and education workers and the balance reflecting an average increase in public sector salaries of 3.4 percent. Capital expenditure was budgeted to increase by 16.5 percent, largely reflecting a surge in capital resources in the form of EU funding delayed from 1994.

c. First quarter outturn

The first quarter Exchequer performance was broadly in line with the budget, when adjusted for seasonal factors and the impact of one-off events. A buoyant economy contributed to satisfactory revenue growth, while current expenditures were dampened by lower interest payments (tabulation below).

First Quarter of 1995 Exchequer Outturn

(In millions of Irish pounds unless otherwise indicated)

article image

Although the first quarter results were satisfactory, the budgetary arithmetic was subsequently affected by a court order to make IR£200 million (compared with IR£60 million budgeted) in equality payments to married women who had in the past received inadequate welfare benefits. These equality payments, scheduled to be made later in the year, will cause the 6 percent nominal expenditure ceiling to be breached. The additional expenditure, (equivalent to 0.4 percent of GNP), will be financed through an asset sale to neutralize its impact on the deficit. 1/ Moreover, the additional payment will not be included in the base for calculating the 2 percent real ceiling on expenditure growth during 1996–97.

4. Tax reform

Since 1987, the Government has been pursuing a policy of tax reform aimed at improving the incentives to create and seek employment. These measures have led to the reduction in the standard rate from 35 percent to 27 percent, a cut in the top rate from 58 percent to 48 percent, an 89 per cent expansion in the standard tax band, and the narrowing of the average tax wedge from 43 percent of total employer labor cost to 37 percent. The reforms are part of a long-term strategy for reform aimed at favoring incentives to work, tackling the poverty trap, reducing the tax wedge, and encouraging enterprise and employment. The reforms, targeted at lower paid workers and new job entrants, aim at widening the standard tax band so that only high-income earners are taxed above the standard rate, maintaining real increases in personal allowances, reducing tax expenditures associated with mortgage interest and health insurance relief, improving tax collection and enforcement, integrating the tax and social welfare codes, and, as resources permit, further reducing the standard corporation tax rate.

Despite the progress made, the tax code contains a number of features that need to be addressed. First, the imposition on labor is high (see below). However, the scope for shifting the tax burden to other sources is limited. A shift toward indirect taxation is hampered by the openness of the economy, and in particular border trade with the United Kingdom and Northern Ireland, as well as the harmonization within the EU of indirect taxes. Moreover, increases in such taxes would—indirectly—affect disposable income and may well ultimately be reflected in demands for higher wages. Increasing the deposit interest retention tax is similarly restricted by the possibility of driving deposits offshore. While increases in property taxes would appear desirable, particularly as their incidence is not easily shifted, there is strong political resistance to further recourse to this revenue source.

International comparisons (tabulation below) suggests that Ireland’s tax imposition on labor, which represents about 49 percent of total revenue, is higher than that of the United Kingdom, but less than OECD and EU averages. However, the Irish data is skewed by the existence of a large, but lightly taxed agricultural sector and the relatively low proportion of workers in the working age population, reflecting a low female participation rate.

Tax Revenue Structure, 1992

(In percent of total revenue)

article image
Source: OECD

Second, income taxes rise sharply at relatively low levels of income, contributing to the high tax wedge in Ireland. The standard 27 percent band extends to income levels of up to IR£8,900 for single wage earners and IR£17,800 for married wage earners, and rises to 48 percent on higher incomes. As a result, single workers earning less than two thirds of the average industrial wage of IR£14,000 are taxed at the higher band.

Third, there is a wide gap between the 10 percent preferential tax rate accorded manufacturing and certain international services, and the standard 38 percent corporation tax rate. Reliance on tax-based incentives and direct subsidies has contributed to a heavy imposition of taxes on labor, while deterring the development of an indigenous service sector. The preferential-tax rate may also affect the types of foreign manufacturing activities attracted to Ireland. Cost centers, such as research and development may not be located in Ireland as these would tend to reduce the profitability of the Irish subsidiary.

Fourth, replacement ratios remain high. Even after the reforms of the 1995 budget, social welfare payments represent 60 percent of the average industrial wage for a family with two children and 70 percent in the case of a family with four children.

5. Recent trends in current expenditure

During 1989–94, gross current noninterest expenditure increased at an annual average rate of about 8½ percent, compared with nominal GNP growth of almost 7 percent. The structure of current expenditure changed during this period. As a share of gross current expenditure, interest payments declined from 22 percent to 16 percent, while social service expenditures increased from 55 percent to 58 percent, reflecting increased health care costs and a policy to improve the real level of social welfare benefits. 1/ Public sector pay and pension expenditure rose as a share of total expenditure from about 30 percent to 32 percent, reflecting per capita pay increases of about 7 percent annually (tabulation below).

Current Expenditures, 1989–95

(In percent of gross current expenditure)

article image

Operations in support of industry, agriculture, and tourism.

The main components of the current expenditure in the Irish budgetary presentation are Central Fund services (about one quarter of total current expenditure), which comprises interest on the national debt, payments to the EU, and certain other non-discretionary current expenditure. The other component of current expenditure—non-capital supply services—accounts for the balance of current expenditure, including social services, infrastructure, the costs of services provided to the agricultural, industrial, and tourism sectors, and spending on security.

Central Fund services increased at annual rate of 2.8 percent during 1989–94; they are budgeted to increase by 5.9 percent in 1995. The main component of Central Fund expenditure is the cost of servicing the national debt which in recent years has remained relatively static, growing only at an average annual rate of 0.8 percent during 1989–94. In addition, savings in debt service costs generated by the NTMA have been applied to subsequent budgets (IR£120 million of such savings were applied in 1994 and IR£59 million in the 1995 budget). In 1995, debt service expenditures are budgeted to increase by 8.2 percent. The next largest component of Central Fund expenditure is Ireland’s contribution to the EU, which has increased 11.8 percent per annum during 1989–94; an increase of 7.3 percent is budgeted in the 1995 budget.

Expenditure on gross non-capital supply services rose by 8.3 percent annually during 1989–94; it is budgeted to grow by 6 percent in 1995. Spending on social services, which accounts for about three quarters of the total, increased at an annual rate of 8.4 percent. The rapid increase in social welfare expenditure reflects the increase in the unemployment rolls during 1989–93, substantial real increases in all social welfare payments, the introduction of new allowances and the expansion of existing social assistance programs, and large increases in supplementary welfare allowances, especially for rent and mortgage payments.

Government discretion in determining the level of social benefits will affect the evolution of social assistance expenditure over the short run. The Government is committed to maintaining the real level of social welfare benefits. In the last five years there have been sharp real increases in social welfare benefits (which have exceeded increases in industrial wages) as the Government has pursued a policy of bringing all rates of social welfare payments up to the minimally adequate rate recommended by the Commission on Social Welfare. Further increases above the rate of inflation would be needed to meet the recommended minimally adequate rates.

The growth in health expenditure—which increased by 11.4 percent annually during 1989–94—is the result of demographic and technological factors: increased life expectancy has contributed to an increase in the population over 65, a group that accounts for a disproportionate share of health spending, while the need to replace medical equipment made obsolete by technological advances has also contributed to the increase in health spending.

Expenditure on education, which has increased by 8.7 percent annually during 1989–94 and is budgeted to increase by 6 percent in 1995, has undergone a reorientation in emphasis, reflecting a large decline in primary enrollments and a less important increase in university enrollments. Budgetary savings from these changes are likely to be offset, however, by the commitment to improve the pupil-to-teacher ratio at the primary level, a higher proportion of students pursuing secondary and university training, the abolition of university fees introduced in the 1995 budget, and an anticipated increase in the enrollment of mature students.

Exchequer pay and pension expenditure increased 8.4 percent annually during 1989–94; it is budgeted to increase by 5.7 percent in 1995. Public sector salary increases are established in the context of multi-year wage agreements for the private and public sectors negotiated by employer, employee, and government representatives. Much of the rapid increase in pay and pensions in recent years reflects the accumulation of increases deferred in previous budgets when fiscal retrenchment was at a premium.

Budgetary planning has been disrupted by the need to make periodic cash infusions to public enterprises and meet deferred liabilities. Public enterprises have received periodic capital injections to help service publicly guaranteed debt, finance pension plans, and meet past losses and restructuring expenses. Aer Lingus received IR£175 million during 1993–94 to cover past losses and for restructuring expenses; NET, a fertilizer company, received IR£22 million during 1993–94 to cover debt service payments; and IR£134 million was paid in 1994 to cover the transfer of employees from civil service status to the payrolls of An Post and Telecom Eireann and meet unfunded liabilities. These budgetary transfers to public enterprises amounted to about ½ percent of GNP annually during 1993–94.

Deferred and contingent liabilities (such as the court-ordered payment to married women welfare recipients in 1995) and further capital infusions to public enterprises are likely to continue to disrupt expenditure control. Likely prospective transfers to public enterprises during 1995–97 include: IR£40–50 million in restructuring expenses to Irish Steel (subject to EU approval); IR£141 million to Bord na Mona, the peat company, (subject to EU approval), and IR£181 million in further payments to the pension funds of An Post and Telecom Eireann. Prospective contingent liabilities include compensation to recipients of tainted blood transfusions who contracted hepatitis and the reimbursement of EU livestock intervention receipts. 1/

6. Medium-term outlook

The staff’s baseline medium-term projections reflect the authorities’ policy objectives, expectations for continued robust growth, and (at least until the turn of the century) substantial transfers from the EU. Among the policy objectives having a major impact on the projections are the tax reform and discretionary expenditure measures adopted in the 1995 budget, whose full-year impact will not be felt until 1996. The authorities’ intention to continue tax reform results in a projected elasticity of tax revenue that is lower than that experienced since 1987. Their intention to limit real non-interest expenditure growth to 2 percent during 1996–97 is also taken into account for those years. Expenditure restraint is continued thereafter in the projections as the means to balance the authorities’ objectives of achieving a phased reduction in the deficit, debt reduction, and tax reform (tabulation below).

Demographic factors are expected to facilitate further improvements in the public finances, at least over the medium term as the number of dependent children is expected to decline. Over the long run, the financing of retirement benefits is likely to pose budgetary pressure, although this effect is likely to come some 20 years later than in other OECD countries.

The projections illustrate the impact of the full-year effects of the tax reform measures and increased expenditure adopted in the 1995 budget on 1996, which shows a sharp increase in the EBR to 3.0 percent of GNP from the 2.4 percent budgeted in 1995. They also illustrate the need for a continued tight rein on expenditure to balance the competing goals of tax reform and debt reduction. In the projections, containing real noninterest current expenditure growth during 1997–2001 to 2 percent per annum permits a steady decline in the Exchequer debt-to-GNP ratio to 69.7 percent by 2001, not with-standing a projected decline in current revenue from the 34.4 percent of GNP budgeted for 1995 to about 31 percent of GNP by 2001. The projected decline in current revenue as a percent of GNP would permit continued tax reform aimed at reducing the tax impediments to job search and creation. This combination of policies would also permit the attainment of the Maastricht target of a general government debt-to-GDP ratio of 60 percent early in the next century.

Baseline Medium-Term Budgetary Outlook

(In percent of GNP)

article image
Sources: Data provided by the authorities; and staff projections.

The baseline scenario would be adversely affected by a reduction in economic growth or an increase in interest rates. A reduction in the real growth rate from the 4.5 percent annual rate of the baseline scenario to 3.5 percent would result in an EBR of 3 percent of GNP at the end of the projection period, compared with the baseline EBR of 1.1 percent of GNP. Under the slower growth scenario, the Exchequer debt-to-GNP ratio at the end of the projection horizon would be 10 percentage points higher than that of the baseline scenario. An increase in the average interest cost of Exchequer debt of 1 percentage point would, by the end of the projection period, result in an EBR of 2.3 percent of GNP (compared with 1.1 percent of GNP under the baseline scenario, while Exchequer debt would represent three quarters of GNP (compared with about 70 percent under the baseline scenario) (tabulation below).

Sensitivity of Medium-term Budgetary Outlook

(In percent of GNP)

article image

As shown in the tabulation below, allowing real noninterest current expenditure to grow by 4 percent per annum after 1997 would result in an EBR of 3.2 percent of GNP in 2001 and Exchequer debt-to-GNP ratio of about 75 percent. The growing Exchequer borrowing requirement and diminishing pace of debt reduction of this scenario highlight the importance of maintaining expenditure restraint.

Rapid Expenditure Growth

(In percent of GNP)

article image

Prepared by David J. Ordoobadi.


A retrospective of Ireland’s fiscal adjustment in the 1980s was provided in SM/94/125. (5/25/94).


The income elasticity of tax revenue averaged 1.2 during the period, and 1.03 after netting out tax amnesty proceeds.


These “savings” represent the accumulation of lower-than-budgeted debt service payments held for allocation in subsequent years. The residual savings of IR£59 million were allocated to the 1995 budget.


Expenditure restraint was facilitated by two nonrecurrent factors. First, Departmental cash balances of IR£58 million available at end-1994 were treated as a negative expenditure in the 1995 budget. Second, the IWO million in pension fund restructuring payments that were shifted to 1994 from 1995 were included in the base for calculating the 6 percent expenditure ceiling. Together, these one-off factors represent 0.3 percent of estimated 1995 GNP.


Tax cuts adopted in the 1995 budget are expected to reduce revenue by IR£213 million (0.6 percent of GNP) in 1995 and by IR£411 million (1.2 percent of GNP) over a full year. Tax increases are expected to yield IR£54 million (0.2 percent of GNP) in 1995 and 1’1(09 million (0.3 percent of GNP) over a full year.


The standard corporation tax rate applies to all firms not engaged in manufacturing or certain internationally traded services, for which a 10 percent rate applies.


The abolition of university fees offsets the loss of this shelter.


Local loan fund assets will be securitized and sold to generate capital income sufficient to offset the increased current spending.


The Government is committed to increasing social welfare benefits to the minimally adequate rate recommended by the Commission on Social Welfare (see below). As a result, real social welfare benefits have increased rapidly.


The amounts involved for the compensation to blood recipients and for EU reimbursement are subject to judicial decision and discussion with the EU, respectively, and are therefore uncertain. However, these contingent liabilities coupled with the payments associated with the court ruling on arrears to married women welfare recipients could represent as much as 1 percent of GNP.