Friday 16 November 2018

Rise in State's debt servicing costs helps push public finances to worse deficit than last year

Decline primarily due to an increase in expenditure
Decline primarily due to an increase in expenditure

Donal O’Donovan

A rise in the State’s debt servicing costs in the first half of 2018 helped pushed the public finances to a worse deficit than at the same time last year, even allowing for the sale of AIB shares in 2017, new figures shows.

The Department of Finance’s official end of second quarter 2018 Exchequer Statement records a shortfall of €823m as spending increases outpaced rising tax income.

A surplus of €2.485bn recorded at the same point last year was distorted by the sale of AIB shares in June 2017. Stripping that out, the Exchequer balance shows an underlying annual decrease of €323m.

The decline was primarily due to an increase in expenditure, but was somewhat offset by increased tax revenue, the Department said.

The latest figures record tax revenues of €24.941bn collected in the first six months of this year, up 5.4pc on the previous year and in line with profile, or budget forecasts.

So called voted expenditure, was €23.682bn, below profile, but up 8.5pc in year-on-year terms.  

However, non-voted expenditure of €5,516 million was up 5pc year-on-year. That €261m annual increase was driven by a higher EU budget contribution and increased debt servicing costs.

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