New figures from the Central Statistics Office show that the country's budget deficit fell to 3.1% of gross domestic product in the fourth quarter of 2014, or a deficit of over €1.46 billion.
This is well under a European Union-set target of 5.1% as the Government moves towards cutting it below 3% by the end of this year.
The country's deficit fell from 5.3% (or €2.36 billion) at the end of 2013 thanks to the final measures of a seven-year austerity drive and rapid economic growth.
At almost 5% last year, the Irish GDP growth was the fastest rate across the European Union.
Today's CSO figures show that the general government gross debt fell to 109.7% of GDP (€203.3 billion) in the fourth quarter of 2014 from 114.3% (€208.2 billion) the previous quarter, mainly due to the early repayment of some of the country's bailout loans.
The deficit had represented more than 13% of annual economic output at the height of its financial crisis four years ago, but the Government had forecast a reduction to 3.7% last year before a jump in year-end government spending.
