The following statement was issued today (Tuesday 5 January 1999) by the Minister for Finance, Mr Charlie McCreevy, TD.

The attached statement of receipts into and issues out of the Exchequer shows the position for the period 1 January to 31 December 1998.

The outturn Exchequer surplus is £747 million or €949 million. This is £836 million better than the target EBR of £89 million and £79 million better than the £668 million estimated outturn surplus published on 2 December.

The most notable features of the outturn are

• the £747 million surplus is the largest cash surplus on record

• the General Government Balance showed a surplus of 1.8 per cent of GDP, and

• net current expenditure came in broadly in line with the Budget target.

The details are as follows:

Current Budget

Total current receipts amounted to £16,503 million, an excess on the Budget day target of £1,006 million or 6.5 per cent and £49 million above the estimate published on 2 December 1998.

The tax inflow of £16,129 million was significantly ahead of expectations. Tax revenue for the year was 13 per cent ahead of 1997 compared to a Budget target of 6.3 per cent. Almost all tax heads were very significantly ahead of target with overall tax revenue exceeding the Budget target by about £962 million, £36 million above the estimate published on 2 December 1998.

Non-tax revenue came to £374 million or 13.3 per cent ahead of target and was £13 million above the outturn projected on 3 December.

Current supply issues totalled £10,978 million, an increase of 6.4 per cent on 1997. Expenditure undershot the Budget target by £7 million and was £56 million less than the estimate published on 2 December.

Expenditure in certain areas exceeded the Budget Estimate, such as Justice (£89 million), Education and Science (£40 million), Agriculture and Food (£27 million) and Health and Children (£20 million), but these have been fully offset by savings on other Departments' spending, mainly Social Welfare (including PRSI). The additional expenditure on the Justice Votes was mainly as a result of increased pay costs on the Garda Vote arising from the Garda pay settlement and increased overtime costs. Education and Science exceeded its Budget provision largely as a result of technical reasons relating to the timing of salary payments. The extra spending on Agriculture and Food was mainly due to the winter fodder aid scheme for farmers and higher than expected costs on the animal health (brucellosis) programme.

These and other additional costs were fully offset by savings elsewhere, most notably on Social, Community and Family Affairs where spending was £154 million below estimate, mainly as a result of buoyant PRSI income and lower Live Register costs.

Central Fund Services spending of £3,434 million is some £31 million above Budget target and £2 million below the estimate published on 2 December. This arises mainly from additional costs of some £107 million on the EU Budget Contribution and which were partly offset by savings on debt interest.

Total current receipts exceeded current expenditure by £2,091 million. This compares with a surplus of £604 million at the end of 1997.

Capital Budget

Exchequer borrowing for capital purposes came to £1,344 million compared to a Budget target of £1,198 million and an estimate of £1,316 million published on 2 December.

Voted Capital expenditure amounted to £1,931 million, an increase of 31.1 per cent on 1997. This was some £82 million ahead of Budget and £66 million above that assumed on 2 December. The main excesses on Budget arose on Education and Science (£56 million) and the Office of Public Works (£66 million) with these being partly offset by savings elsewhere.

Capital issues under the Acts are well above Budget arising mainly from a decision to meet commitments to Telecom Eireann and the Irish Aviation Authority in 1998.

Exchequer Capital Resources were ahead of Budget expectations by some £43 million and some £17 million above the estimate published on 2 December. This was due mainly to higher than anticipated EU receipts and the repayment of IDA grants.

Exchequer Balance

Taking the current surplus and capital deficit together, the total Exchequer transactions generated an overall surplus of £747 million, compared to a deficit of £236 million at the end of 1997.

The Exchequer funding position is comfortable with end-year cash balances amounting to £1,337 million.

Commenting on the Returns, the Minister said that:-

"These results highlight the continuing wellbeing of the public finances recording as they do the largest cash surplus ever and the General Government Balance showing an overall surplus approaching 2% of Gross Domestic Product. The somewhat higher than expected tax receipts in late November and December could continue in 1999 and could result in a slightly higher Exchequer surplus than that projected on Budget day."

"In keeping with our commitment to our EU partners given at the time of the revaluation of the Irish currency in March, public expenditure has been carefully controlled and the higher than anticipated tax buoyancy applied to delivering a higher budgetary surplus and reducing debt. At the same time there were substantial improvements in public services, with significant increases in expenditure in areas such as health and education, while a substantial first step was taken in addressing our infrastructural needs. In an era of sustained low inflation, strict control over expenditure remains absolutely critical to achieving budgetary targets."

Click here for the attached statement.