Exchequer figures confirm bailout exit remains on track

The Government remains on target to exit the EU/IMF bailout programme next month with the latest exchequer figures coming in broadly in line with forecasts.

The deficit for the 10 months to the end of October was €10.5bn, which is a €3.5bn improvement on the same period in 2012.

Tax revenues were €29,242m for the 10 months to the end of October, which is €888m ahead of last year.

Income tax and corporate tax are both ahead of profile for the year by €439m and €101m respectively.

Vat is down by €180m over the same timeframe.

According to the Department of Finance, non-tax revenue, at €2,397m to end-October is down €281m (10.5%) year-on-year.

As mentioned in previous notes, this reduction is primarily driven by reduced ELG receipts due to the ending of the scheme in Mar 2013.

Capital receipts, at €3,824m to end-October, are up €2,316m year-on-year.

This reflects the sale of contingent convertible capital notes in Bank of Ireland and the sale of Irish Life, it added.

Net voted expenditure at end-October 2013 was €35,310m, which is 2.3% or €844m below profile for the period.

The figures represent a year-on-year decrease of 3.8% or €1,388m with all departments broadly on profile.

“All in all, today’s figures are broadly in line with the trends outlined in prior months.

“The slippage in health spending is a little disconcerting but wider spending remains better than projected, while after a couple of soft months during the summer, tax receipts have improved in September and October,” said Investec economist, Emmet Gaffney.

“The public finances should beat target once more this year, with the government forecasting a budget deficit of 7.3% of GDP (nominal GDP of €165.9bn), inside the EDP limit of €7.5%.

“However, there is little room for error in coming years as the government’s 2015 forecast is bang in line with the EDP ceiling (2.9%),” said Mr Gaffney.

According to the terms of the EU/IMF bailout programme, the Government is expected to reduce the deficit below 3% of GDP by 2015. “The CSO’s announcement that €723m of mobile phone licence receipts will be counted in 2013 means that the Government will comfortably beat the 7.6% of nominal GDP deficit target.

“We now expect that the deficit will equal 6.7% of GDP in 2013,” said Davy Stockbrokers.