THE DEPARTMENT OF FINANCE has revealed that the Exchequer ran up a deficit of €7.066 billion for the first quarter of 2011 – up significantly on the first few months of 2010.
The state received just over €8bn in income for the first three months of the year, but spent over €15bn in the same period – compared to around €12bn in the first three months of 2010.
Most of the extra expenditure, however, can be attributed to a non-recurring cash injection into the banking system of €3.06bn, almost all of which went into Anglo Irish Bank through the honouring of government promissory notes.
There was some good news, however, for the state: both income tax and corporation tax showed significant increases on their 2010 figures, with income tax returns up by 9 per cent while corporation tax ballooned by a whopping 78 per cent. VAT, though, was significantly down, while the increased income tax take was lower than expected.
In terms of state expenditure, meanwhile, most government departments clamped down on expenditure, though spending at the Department of Health and Children increased by over €310m based on the same time last year.
Spending at the Department of Social Protection, which is responsible for all social welfare spending, increased by €480m based on the same time from last year.
Finance minister Michael Noonan said the deficit was “broadly in line” with expectations and was within the target set out under the EU-IMF agreement.
Ireland’s exchequer deficit for the first quarter of 2010 was also behind expectations, though the state’s finances for the rest of the year were able to make up the shortfall between the projected and actual budget deficit.
The state’s funding deficit is ordinarily covered by national borrowing through the issue of new bonds, though at present Ireland is plugging the gap with a €50bn funding package from the EU and IMF, topped up by its own pension reserve fund.