Exchequer deficit soars to €7.5bn in April as Covid-19 pandemic costs mount

The huge costs of the 1.1 million people who are in receipt of some sort of Government welfare payment in April -- the first full month of the Covid-19 emergency -- has sent the exchequer deficit soaring to almost €7.5bn.

Amid the crisis, the Department of Health and the Department of Employment Affairs and Social Protection between them spent around €1.7bn more in April than anticipated -- reflecting only part of the total costs in the one month for the Government in fighting the virus and mitigating the economic fallout from the pandemic.

The bill for the additional health spending by the Department of Health to fight the virus in April came to €320m while the bill for the weekly pandemic payments and for people on the main unemployment count in the month came to €1.4bn, a Department of Finance spokesman said.

The total welfare bill in the month does not include the costs of the wage-subsidy scheme which is administered by the Revenue Commissioners.

The numbers in receipt of the pandemic unemployment has continued to rise to 598,000, up by 7,000 in the past week, according to new figures published by the Department of Social Affairs on Tuesday. That means that 1.1 million people of the 2.3 million in the labour force are already in need of some sort of payment to make ends meet.

The figures are significant as Government officials and economists try to plan for the eventual bill this year in terms of funding for the exchequer deficit.

On the revenue side, the Department of Finance figures are less significant because the exchequer traditionally collects relatively little of the annual tax revenue in April because it is a non-Vat payment month.

Nonetheless, the exchequer took in total tax revenues of over €2.5bn in April, which was down by €223m from April 2019. Income taxes took in over €1.8bn in revenues -- down by €115m from the same month last year.

In its budget update prepared for the EU Commission last month, the Department of Finance forecast that tax receipts would fall to €49.6bn this year from €59.6bn in 2019.

In a scenario that the restrictions were lifted relatively quickly, it predicted a Government deficit of €23bn this year.

Many economists believe the deficit will reach €30bn to take account of the likely extensions to the pandemic restrictions.

“The Government is committed to continuing to provide support to ensure our economy recovers as quickly as possible from this crisis,” Finance Minister Paschal Donohoe said.