There was an Exchequer Deficit of €152.9m for the seven months to the end of July, according to figures from the Department of Finance yesterday. This compared to a surplus of €254.9m the same time last year.
However, the Government is still continuing to take in more than expected in tax receipts. Tax revenues in the seven months totalled €20.8 billion compared to €19.6 billion in 2004.
Tax revenues are still getting a boost from Revenue's investigations into tax defaulters. Last month, the Government received €329m from the Revenue's probe into single-premium insurance policies. So far this year, a total of €397m has been gathered from the full range of special investigations being conducted by Revenue.
Income tax receipts were up to €5.889 billion from a budget expectation of €5.553 billion. Stamp duty was higher than expected at €1.390 billion, while VAT also came in marginally higher at €7.550 billion.
Total spending of €18.663 billion by the Government Departments is lower than the estimate of €19.460 billion set out in the Budget in December. But capital spending is catching up, according to analysis from Davy Stockbrokers. They said that at the end of the first quarter, capital expenditure was down 40% year on year, while now it is only down 8%.
In the first half of 2005, the Finance Department recorded a deficit of €594m, after a €130m surplus for the first six months of 2004.
The country recorded a modest budget surplus of €33m last year, mainly due to a massive surge in tax receipts which wiped out the €2.8 billion deficit that had been predicted at the start of the year.
The Government is targeting a deficit of €3 billion for 2005, but analysts predict the figure will be closer to €2 billion.
Davys said that it looks as though revenue may come in at least €1 billion ahead of target for the full year. 'But the full extent to which that will finance a reduction in the projected deficit of close to €3 billion will depend upon the amount that is used this year to meet the costs of refunds of nursing home charges,' the stockbrokers predicted.
