Figures from the Department of Finance this afternoon show that there was an Exchequer Deficit of €418m for the first nine months of the year. This compares to a deficit of over €1 billion for the first nine months of 2003 and a budgeted deficit of €2.8 billion for 2004 as a whole.
Total tax receipts increased to €24.6 billion for the first three quarters of the year, compared to €21.9 billion the same time last year. That is €1.64 billion ahead of budget forecasts and is due to extra once-off money from the Revenue's special investigations and better than anticipated receipts from all taxes including VAT and excise duties.
The Finance Department said that year on year, tax receipts were up 12.4% compared to a target increase of 4.9%.
The pick-up in the economy is transforming the public finances even more than what was predicted at midyear. It is now expected that by the end of the year, the Government will only have to borrow €1.2 billion to balance the books compared to a Budget Day forecast of €2.8 billion.
Current Government spending is €334m below profile while spending on capital investment is €742m below target. This is due to slower than expected spending across a number of government departments.
Spending in the Education Department is €128m below target, while transport is €100m below target. The Department of Finance anticipates that some capital expenditure will be carried over into next year.
'The Exchequer returns confirm the improvement in public finances revealed at midyear,' commented the new Finance Minister Brian Cowen.
'Tax revenue is ahead and spending is on target. This is a result of prudent fiscal management which I intend to maintain,' he added.
Commenting on today's figures, IIB Bank's Austin Hughes said the economic picture underlying the tax receipts is one of solid growth but outside of the property market, there is few signs that a boom is currently underway.
He says that the Department of Finance is likely to take a fairly cautious approach in relation to budgetary forecasts for 2005.
'Some cooling in the housing market is likely in 2005 and this will influence VAT and income taxes as well as stamp duties. We reckon Mr Cowen will not want to raise expectations too high in relation to the budget after next. He will also be mindful that borrowing will be boosted by the carry-over of capital spending from this year into next and he will be reluctant to allow the deficit drift too high too quickly,' he says.
The economist says he thinks Budget 2005 will entail 'giveaways' of about €1 billion and an Exchequer borrowing figure for next year of just under €2 billion.
