The Irish Exchequer deficit, at end-November 2010 was €13.3bn compared to
€22.1bn at end-November 2009. The four-year National Recovery Plan 2011-2014,
published last week, set out that the Exchequer Borrowing Requirement (EBR) in
2010 would be €18.8bn, in line with the December 2009 Budget day target.
Corporation tax was €589m above target.
The Department of Finance said this afternoon that the
€8.8bn year-on-year improvement in the Exchequer deficit is largely due to
payments of €3bn to the National Pensions Reserve Fund (NPRF) and €4bn to
Anglo Irish Bank, which were made in 2009 and not repeated in 2010.
Taxes are just under €1.3bn or 4.1% below the same period
last year with net spending €1.8bn or 4.2% lower. Non-tax revenue is up €1.9bn
in the year, due primarily to €1.3bn in fees from the State bank guarantee
schemes and increased surplus income of the Central Bank. On the non-voted
current spending side, debt interest costs are just over €700m higher
Tax receipts in the period to end-November amount to €29.5bn. This is €470m
or 1.6% above target. The Department said November is the largest month of the
year for tax revenues and all tax-categories performed above expectations in the
month. On a cumulative basis, all taxes with the exception of income tax are
above target in the first eleven months. A corporation tax surplus of €589m,
combined with smaller surpluses in the other tax-heads, most notably excise
duties and VAT, offset the income tax shortfall of €356m. Income tax from the
self-employed in the month of November performed better than expected although
PAYE receipts came in below target.
The year-on-year rate of decline in tax revenues now stands at 4.1%. The
National Recovery Plan 2011-2014 forecast a €450m surplus in tax revenues for
the year as a whole. The end-November tax figures are in line with this
Total spending at end-November 2010 is €40.8bn,
which is €1.8bn or 4.2% below the same period in 2009. The Revised Estimates
Volume projected a decline of 1.9% in total net voted expenditure in 2010.
Net current spending at €36.4bn is slightly below target (-€166m or -0.5%) and
is €495m or 1.3% down year-on-year, despite the large anticipated increase in
the current spending of the Department of Social Protection due to high
Net capital expenditure, at just under €4.4bn at end-November is €1.3bn or
23% below the corresponding period in 2009. It is €851m or 16.3% below
target. The expected savings in capital expenditure at year-end are likely to be
largely offset by the costs associated with staff redundancies at the HSE.
End November Exchequer Statement (pdf)
End November Analysis of Taxation Receipts
End November Analysis of Net Voted Expenditure (pdf)
NCB Stockbrokers economist,
Brian Devine, commented: "With regard to the banking
sector drag, the ECB confirmed that they would provide fixed rate full-allotment
auctions for 3 month money throughout Q1 2011. The ECB also stated that it would
continue conducting its main refinancing operations (1 week) and one month
operation as fixed rate full-allotment auctions for 'as long as necessary.'
In simpler terms this means the
Irish banks with sufficient eligible collateral can tap the ECB for as much
funds as they desire at (currently) 1%, thus aiding funding cost for the banks
and postponing the inevitable squeeze on net interest margins. The longer these
measures remain in place by the ECB the better for the Irish banks and therefore
the Irish sovereign.
As frustrating as the banking sector has been, it is worth remembering that the
rest of the economy is still operating and trying to fight its way out of the
recession despite the continued damage to confidence. The decent tax data comes
on the back of an expansion in the manufacturing PMI in November and also a
decline of 4,200 persons from the Live Register (unemployment claims), which saw
the unemployment rate fall from 13.6% to 13.5%."