The 2023 budget cannot be “part of the problem” when it comes to rising living costs, the finance minister said.

Pascal Donoho at a meeting on Friday to help the most vulnerable people to prevent the government from raising debt levels or driving further price increases by targeting the “lowest” level of borrowing needed next year. He said he would only aim.

Mr. Donoho called for a “prospect” in light of the uncertain economic environment and rising borrowing costs.

Bond prices are rising alongside other eurozone countries in anticipation of the European Central Bank’s interest rate hike, and it has been confirmed that this week will begin in July.

“The era of cheap funding has arrived,” Donoho told the Economic and Social Research Institute (ESRI)’s annual budget meeting Friday morning.

“We aim for the lowest level of borrowing needed to respond to the various developments and tensions that are occurring in society and government.”

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The government said it would aim to “further reduce the debt-to-income ratio” next year, promising to help those who have been hit hardest by rising living costs.

Government debt is 96.5% of national income, lower than the European average, but the government is targeting a ratio of about 80% by 2025.

Mr Donoho warned that no further welfare measures should contribute to inflation. Inflation reached a 38-year high of 7.8% in May, reaching 8.2% according to EU harmonized measures.

“Of course, we continue to recognize and support the cost of living challenges, but overall, we need to prepare and provide a budget that does not add itself to the apparently ongoing inflationary pressures.

“Budget policy itself should not be part of the problem.”

Mr. Donoho and Minister of Public Expenditure Michael McGrath are currently laying the groundwork for the budget, and a summer economic statement will be released shortly.

According to Donoho, reduced borrowing, reduced debt, subsidies to the most vulnerable people, and reduced reliance on corporate taxes will guide the next budget.

He warned that higher inflation is likely to continue, not “at the speed we are seeing.”

“There are clear signs that changes in the economic system are happening now,” he said.

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