The following information has become available since the staff report (SM/99/176) was issued on July 14, 1999. This information does not change the thrust of the staff appraisal.
1. The government announced its decision to begin partially funding its future public service and social welfare pension liabilities by making an annual set aside equivalent to 1 percent of GNP, starting in 1999. Details of the proposal (e.g., the management of the funds) have not yet been decided, but the authorities expect the necessary legislation to be in place by the middle of next year. The government has also decided to use a part of the proceeds from the privatization of Telecom Eireann to supplement the 1999 set aside and to fund the Exchequer’s pension liabilities with respect to Telecom Eireann and An Post employees, accrued prior to 1984.
2. The government has approved the policy priorities and the general financial framework for the National Development Plan (2000-06). The plan is expected to address national and regional investment needs through a seven-year investment program at an estimated total cost of IR£ 38 billion in 1999 prices. The annual average provision is equivalent to about 8 percent of 1999 GDP, and represents an amount some 25 percent higher than the 1999 level of capital spending. The contribution of EU structural funds is projected to be less than 8 percent of the total cost of the Plan.
3. Consumer price inflation slowed marginally in June. The 12-month increase in the CPI slowed to 1.3 percent in June from 1.5 percent in May, while the EU-harmonized index (HICP) declined to 2.1 percent from 2.3 percent. Service price inflation, however, remained broadly unchanged at around 4.2 percent.