Leadership

Exchequer deficit hits €14.7bn for first six months

02.07.2009
New figures released by the Department of Finance this evening have shown that the Exchequer deficit for the first six months of the year stands at €14.7bn, compared to a deficit of €7.49bn in the same period last year.

The department said the deterioration in the public finances was primarily due to a payment of €3bn to the National Pension Reserve Fund (NPRF) as part of the bank recapitalisation programme, a payment of €3bn to Anglo Irish Bank, and a year-on-year decrease in taxes of the order of €3.3bn or 17.3pc.

Tax revenue for the six-month period was €15.8bn, which was 1.2pc (€188m) below expectations.

In terms of expenditure, the Government spent a total of€530m, which came in a little bit below targeted spend at 2.3pc less than expectations for the period.

In a statement, the Minister for Finance, Brian Lenihan TD, said the figures showed that the difficult decisions taken in the recent April Supplementary Budget are taking effect.

The Minister said the rate of decline in overall tax revenue has eased. However, he acknowledged that reflecting the weaker economic conditions, income tax and VAT are ”a little behind expectations at this stage of the year”.

He also said that the decision in the October Budget to change payment dates for corporation tax has had an impact on today’s figures.

The effect of the corporation tax change means that large numbers of companies are making payments in June, which improves the tax position on a year-on-year basis. In order to get a sense of the underlying position, excluding the additional corporation tax payment made this June would leave taxes around 20pc below the first six months of last year, the department said.

“There are still substantial targets in the months ahead, so tax revenues will need to be carefully monitored as the year progresses. Nonetheless, overall tax revenues are close to our mid-year target,” Minister Lenihan said.

“Stabilising the public finances is a critical part of the renewal of our economy. We must pursue this course of action resolutely to allow all in society to benefit from the upturn in the global economy when it occurs.”