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Ireland’s economic growth could affect aid from EU – Finance Minister

DUBLIN: Ireland’s economic growth is welcome, but there are concerns that it could affect aid from the European Union. Ireland is the only country to grow economically in spite of the Pandemic crisis last year. Finance Minister Paschal Donohoe said that even though EU does not pay attention to this in terms of funding, other countries may point this out.

The Finance Minister has made it clear that a growing economy means that EU aid will be smaller. The share of Ireland in the European Union’s COVID Recovery Fund will be lesser since it is calculated using gross domestic product (GDP). The so called Leprechaun economics effect means that Ireland will receive relatively little EU funding.

The Irish government was offered €853 million in grants and loans from the EU’s €672 billion pandemic recovery fund. The funds are allocated on the basis of growth rate, population and unemployment.

In 2020, Ireland beat the European Union’s growth rate. Therefore, Ireland may not receive the same level of financial assistance as other nations, the Finance Minister said. Ireland was the only economy in the European Union to grow, according to a winter report released by the European Commission last week.

Ireland’s GDP is projected to grow by 3% in 2020 on the back of multinational exports. Meanwhile, In the European Union it fell by an average of 6.3%. GDP is the standard metric used by the EU to measure GDP, whereas it has been seen as a poor measure of Ireland’s domestic wealth.

“I expect that our plan will be very, very targeted, and while no decisions at all have been made on what will be the recipients of the funding that will be available from the recovery fund of the EU, it’s at least a possibility that we will make very targeted use of this funding by concentrating on a number of particular (either) areas or projects,” said Mr. Donohoe.

Prior to EU funding, countries must submit their national plans to the Commission and seek the approval of EU legislation that allows them to raise extra money in the bond markets.

The exact allocation of Ireland under the Fund is known as the recovery and resilience facility. This amount will only be known when final GDP data are released by the European Union in June 2022. The bulk of the money should be paid out by the end of this year, Mr. Donohoe said.

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