Key week for Finance Minister Donohoe over financing Covid billions  

Minister for Finance Paschal Donohoe. File Picture

Minister Paschal Donohoe faces key decisions over financing the billions extra needed to fight the fallout from the Covid crisis amid the tougher-for-longer restrictions due to the shortage of vaccines.  

Ireland's budget for this year will be scrutinised in the coming weeks by the European Commission as Government ministers give little away on the effects the level 5 restrictions will have on its finances and the budget deficit.  

The Commission will also be deciding and endorsing the programmes Ireland has submitted for grant aid and loans under the EU-wide €675bn recovery and resilience facility - already much criticised as being too puny when compared with the trillions pledged for US jobs proposed by the White House under Joe Biden.                                              

Minister Donohoe has already seen the March-end exchequer figures which when made public on Tuesday will likely bring welcome news, as at least one of the State's big four tax revenue streams, income taxes, holds up well. 

For the opening two months of the year, income tax revenues at €4bn were ahead of the amount collected in January and February in 2020 before the pandemic, reflecting the billions since spent in Government supports to keep people in jobs. 

Tuesday's figures for March may come too early to judge whether corporation tax revenues are set to better the €11.8bn the Government collected in taxes from companies in 2020. 

But the clue to whether Minister Donohoe will need to borrow billions more will come in the March spending figures. 

In the first two months, net voted expenditure at €8.9bn was 11% ahead of 2020.     

In an assessment at the time of last October's budget, the Department of Finance projected the budget deficit this year could range from €20.5bn to as much as €25bn, if the pandemic lockdowns latest.  

Last week the Central Bank forecast the budget deficit this year of €21bn and €10bn for 2022. That's on top of the €19.6bn gap for last year. 

Meanwhile, Expenditure Minister Michael McGrath published the first report into the review of the National Development Plan. 

“Our focus is on delivery," he said.