Exchequer Deficit Rises To Nearly Four Billion Euro

An Exchequer deficit of €3,721 million was recorded in the first quarter of 2009 compared to a deficit of €354 million in the same period last year.

Tax revenue was down year-on-year by €2.6 billion or 23%. Total net voted expenditure was just over €680 million or 6% above expenditure levels for the same period of last year.

Commenting on the first-quarter returns, the Minister for Finance, Mr Brian Lenihan, T.D., said that: "Today's figures are further evidence of the weakness of the Irish economy and of the associated pressures on the public finances.

"As the economy has continued to slow, we have seen significant increases in the numbers out of work.

"While expenditure has been successfully contained across most areas, the additional welfare pressures mean that Social Welfare payments are now running at a rate of 12% above the same period of last year. "Over the coming months further pressures will likely emerge in this area of Government spending.

"In terms of taxation, all areas of taxation are now significantly down on the same period of last year.

"The main four tax areas - VAT, Income Tax, Corporation Tax and Excise Duties are now collectively 18 1/2% down on an annual basis.

"At the start of the year, the 2009 estimate for tax revenue was set at €37 billion. That represented an annual decline of 9 1/4%.

"At end-February my Department expected, on a no policy change basis, tax revenue of the order of €34 billion in 2009. This remains the Department's current working estimate."

In addition to the end-March results, the Department of Finance published today a series of tables setting out some of the key aggregates in advance of this week's Supplementary Budget.

The purpose of this information is to assist in understanding where the public finances are likely to be in the absence of corrective action.

On that basis the overall pre-Budget General Government Deficit for this year is now estimated to be of the order of -12 3/4% of GDP.

Commenting on the emerging position for the year as a whole, Mr Lenihan said: "There is no question that there has been a very serious deterioration in the public finances.

"Right now, reflecting the very weak international situation and the very significant domestic developments, the Irish economy is anticipated to contract by about 6 3/4% in GDP terms (and around 7% in GNP terms) this year.

"Reflecting this extremely weak economic climate tax revenue is back to levels last seen in the early part of this decade and expenditure, mainly as a result of the significant increases in unemployment, is running ahead of where we had planned for.

"The Government has already taken action to address this unsustainable position and we must recognise that the budgetary position will take a number of years to correct."