|The Taoiseach Brian Cowen, with the Minister for Finance Brian Lenihan at the Annual Fianna Fáil Wolfe Tone commemoration in Bodenstown, Co. Kildare, Oct 18, 2009.
At end-2009, an Irish Exchequer deficit of €24.6 billion was recorded, which is slightly better than was expected in the December Budget.
It compares to a deficit of €12.7 billion in 2008. Tax revenue, at €33.,04 billion was €1,36 billion or 3.9 per cent behind the target set in the April 2009 Emergency Budget - - down 19 per cent on 2008 and back to 2003 levels.
Current spending is up 70 per cent on 2003 levels. Total net voted current spending at €47.16 billion in 2009 was €221 million or 0.5 per cent less than targeted and 4.4 per cent down on 2008.
Commenting on the returns the Minister for Finance, Brian Lenihan, T.D. noted that:“The Exchequer Returns for end-2009 released today by my Department show that the overall deficit position for 2009 was €24.6 billion, which is better than expected in December’s Budget.
This improvement in the 2009 position is largely due to a better than anticipated performance in tax revenue in the month of December. This is welcome news. That said, tax receipts at just over €33 billion, were down €7.7 billion or 19 per cent on a year-on-year basis. The last time that receipts were at this level was 2003.
Overall net voted expenditure, at some €47 billion, was €221 million or 0.5 per cent below profile and was 4.4 per cent lower year-on-year. Throughout 2009, the Government has maintained a tight control over public spending and this will continue given the reduced resources of the State.
Today’s figures also highlight the impact of our rising debt levels, as debt servicing costs have increased by over €1 billion in 2009. This is clear evidence of the need to take action to achieve long term sustainability of the public finances.
I believe that the 2009 Exchequer Returns demonstrate that the action taken by Government in managing the public finances is working. Given the small improvement in the actual deficit over that anticipated in the December Budget we face into this year’s task with a greater sense of confidence. The challenges we face are great but the Government is committed to the targets set out in the recent Budget. As I said, economic growth will return during the course of this year and this will assist in the ongoing improvement in the public finances.”
The year-on-year deterioration in the deficit of some €11.9 billion is primarily explained by a decline in tax receipts of €7.7 billion, an increase in debt servicing costs of some €1.1 billion, a decrease in net voted expenditure of some €2.2 billion, the €4 billion payment to Anglo Irish Bank and €1.3 billion in respect of the frontloading of the annual contribution to the National Pensions Reserve Fund (NPRF).
Tax receipts summary
Total current receipts at end-December amounted to €33.9 billion compared to receipts of €41.6 billion in 2008.
Tax Revenue, at €33.04 billion is €1.36 billion, or 3.9 per cent, behind target at end-December and is 19 per cent down year-on-year.
Non-tax revenue to end-December was €836 million. This compares to €847 million in 2008.
Capital receipts to end-December amounted to €1.46 billion compared with €1.39 billion in 2008.
Total net voted spending at €47.16 billion at end-December was €221 million or 0.5 per cent less than target. The year-on-year decline in 2009 was 4.4 per cent.
Net voted current spending at end-December at €40.3 billion was €245 million or 0.6 per cent less than the target. The year-on-year decline was 1.2 per cent.
Net voted capital spending at end-December at €6.91 billion, was €24 million or 0.3 per cent above the published target. The year-on-year decline was 19.3 per cent.
Non-voted capital expenditure at end-December was €7.83 billion. This compares to €2.49 billion in 2008. The year-on-year increase is due to the payment of €4 billion to Anglo Irish Bank in 2009 and the increase of €1.3 billion in respect of the frontloading of the annual contribution to the National Pensions Reserve Fund (NPRF - - a total of €3 billion was paid to the NPRF in 2009, in 2008 some €1.7 billion was transferred to the NPRF).
Expenditure on Central Fund Services totalled €4.99 billion at end-December compared with €3.94 billion in 2008. The increase year-on-year is largely due to increased debt servicing costs of some €1.1 billion in 2009.
Davy chief economist Rossa White commented:
Tax revenue almost €500 million better than recent estimate
Tax revenue ended the year almost €500 milllion better than the estimate made on Budget day, December 9th.
It meant that the year's tax total was €33.04 billion, the lowest since 2003. That marked a drop of €7.7 billion or 19 per cent on the haul of €40.78 billion in 2008. In comparison note that nominal GNP probably slipped by 12 per cent last year, highlighting the sensitivity of tax revenue to transaction taxes on property and consumption.
But the better December outturn led to revenue exceeding the Budget estimate for 2009 (from four weeks ago) by €473 million. Last month, tax revenue increased 19 per cent from the low base of December 2008. That is flattered by the changing of Capital Gains Tax payment dates to mid-December. Excluding CGT, revenue rose 8.3 per cent year-on-year in December 2009.
Excise duty jumped (from last year's depressed level) and underlying income tax receipts fell only 5.4 per cent compared with December 2008. The true income tax decline for the full year was not 10.2 per cent, but 8.6 per cent, as a result of the transfer of some revenue from income tax to stamp duty under Health Insurance Bill (the table on the left hand side shows the 2009 numbers).
General government deficit below 11.5 per cent of GDP in 2009
The full year GGB deficit finishes the year below 11.5 per cent of GDP (versus a Budget estimate of 11.7 per cent) thanks to better-than-anticipated tax receipts and slightly lower-than-profile current expenditure.
It was encouraging to see that the government met its capital spending target by catching up late in the year.
Deficit likely to dip below 11 per cent of GDP in 2010
The government's tax revenue forecast for 2010 already looked conservative at Budget time, but now that definitely looks the case in the light of these data. We forecast revenue to slip only slightly to €32 billion, rather than the official forecast of €31 billion in 2010, enough to pull the deficit below 11 per cent of GDP.