€7.1bn hole in finances but State hits bailout targets
THE Government met its targets in the €85bn EU-IMF bailout deal in the first three months of this year -- but missed its own targets during the same period.
Although it managed to collect more taxes and reduce spending as required under the deal, it was still not enough to meet its own targets for VAT and income tax. And the size of the hole in the public finances was up to €7.1bn in the first three months.
This was twice the exchequer deficit posted in the first quarter of last year, as the cost of bailing out Anglo Irish Bank and Irish Nationwide began to bite.
Without the bailout payments, the deficit would have been almost identical to the previous year's €3.9bn.
However, the figures were still welcomed by Finance Minister Michael Noonan, who hailed the fact that the bailout targets had been met. He is due to meet with the IMF team that arrives in Dublin today.
But the State missed its own tax targets even though the €7.5bn it raised during January, February and March was up nearly 4pc from last year. That was still below its anticipated €7.64bn, because income tax and VAT revenues came in below expectations.
Income tax was 4.2pc below target at €2.87bn, while VAT was 5.4pc below target at €3.11bn.
The Government did, however, manage to undercut its spending target -- with spending of €10.9bn in the first three months of the year, compared with a target €11.2bn.
Mr Noonan said the €7.1bn exchequer deficit for the first quarter was broadly in line with his department's expectations.
"While the weakness in certain taxes is a concern, the overall exchequer targets set in the Budget remain valid at this point in the year," he said.
His colleague, Enterprise Minister Richard Bruton, gave a hint yesterday about how the Government planned to raise the €220m needed to pay for measures in the forthcoming "jobs budget".
He said Fine Gael had earlier proposed that it could be funded by the early payment of the first portion of the 0.5pc pension levy.
Fianna Fail finance spokesman Brian Lenihan said the budget targets set by the previous Government, which he served in, were being met.
But Sinn Fein finance spokesman Pearse Doherty said it was worrying that VAT and income taxes were €304m behind government projections.
Yesterday's figures contained the first of 10 payments from the taxpayer to Anglo Irish Bank and Irish Nationwide.
The amount was larger than €2.87bn of income tax collected so far this year.