Exchequer deficit hits €20 billion

The Exchequer deficit was running at over €20.1 billion by the end of September, according to figures released today by the Department of Finance.

However, the Minister for Finance, Brian Lenihan, has said the returns show that stabilisation measures introduced by the Government are starting to take effect.

Mr Lenihan admitted that tax receipts are likely to be running €2 billion below target by the end of the year.

The State took in €23.7 billion in tax in the first nine months of the year, which is €965 million (or 3.9%) behind the target set in the Budget.

This was offset somewhat by the drop in public spending, which at €34.7 billion was €514 million (or 1.5%) behind initial plans.

The Exchequer deficit is now running at over twice the amount it was at the same stage in 2008. At the end of September last year it stood at €9.4 billion.

The huge rise in the deficit is being attributed to a €4.8 billion decline in tax receipts, the €4 billion paid to Anglo Irish Bank to save it from going under and the €1.7 billion that has been pumped into the National Pension Reserves Fund.

Mr Lenihan said that the levelling off in the rise in unemployment means that the Department is not expecting there will be any further savings in spending.

On the basis of emerging trends, Mr Lenihan said the general Government deficit for 2009 is now forecast to be in the region of -12% of GDP.

Alan McQuaid of Bloxham Stockbrokers has said the Government still has work to do on cutting public spending, and has called on it to show public sector unions 'who is boss'.

Fine Gael's Finance Spokesman Richard Bruton claimed that the admission that tax take may be heading for a €2 billion shortfall could be 'hopelessly optimistic'.

Reacting to the figures the employers' group IBEC said they were a further reminder of the challenges that lie ahead in the Government's efforts to correct the public finances and there was no room for complacency.

Spokesman Fergal O'Brien said the September returns showed that economic activity remained 'exceptionally weak'' and the Budget must deliver immediate and substantial measures to close the gap between Government expenditure and revenue.