The following statement was issued today (Wednesday, 4 January, 2006) by the Minister for Finance, Mr Brian Cowen, TD.

An Exchequer deficit of €499 million was recorded in 2005. At the start of 2005 it was expected that this would be just under €3 billion.

Higher than expected tax receipts amounting to €1.75 billion and lower than expected spending have reduced the Exchequer deficit.

Public spending remains at an all time high, up 9 per cent in 2005 over 2004, that is an additional €56 million or so per week.

Commenting on the results, the Minister for Finance said:
“2005 was a good year in terms of the economy and public finances, with growth of 4 to 5 per cent and a balanced fiscal position. The big story was the increase in employment – 96,000 or 5 per cent as of Q3 2005 versus Q3 2004. The outlook for 2006 is encouraging as the IDA has confirmed. Jobs continue to be the priority and for that we must remain competitive in labour and other cost terms. Inflation is moderate at around 2½ per cent and my contribution to that was not raising indirect taxation in my first two Budgets. Tax revenues were well ahead, up 10.3 per cent versus 5.4 per cent forecast. Much of this – 80 per cent – was due to Revenue special investigations, extra stamp duty and bumper CGT. We do not expect a similar performance from these taxes in 2006.”

Revenue
Total current receipts in 2005 amounted to €39,849 million compared to receipts of €36,383 million for 2004.

Tax Revenue, at €39,254, million is €1,749 billion ahead of profile at end-year. Year on year tax receipts were up 10.3 per cent compared to the profiled increase of 5.4 per cent. The main excesses are on Stamps (€640m), Capital Taxes (€529m), and VAT (€464m) while Corporation Tax is €268m below profile.

Non-tax revenue in 2005 was €595 million. This compares to €802 million for 2004 and is in line with expectations. The difference between 2004 and 2005 receipts is due largely to a lower Central Bank Surplus.

Capital receipts in 2005 amounted to €517 million compared with €653 million for 2004, due largely to lower ERDF and Feoga receipts.

Expenditure
Voted Total Expenditure
Overall net voted spending was €35,467 million at end 2005 compared to €32,548 million for 2004, an increase of 9 per cent compared to the planned increase of 11 per cent for the year as a whole provided for in the Revised Estimates.

Net voted current spending in 2005 was €29,601 million compared to €27,180 million in 2004 - an increase of 9 per cent. The savings on current spending of €564 million compared to the 2005 Revised Estimates allocation reflect savings across all votes and higher than anticipated receipts, including EU Structural Fund receipts.

As previously indicated, €400 million will be provided in 2006 to meet the cost of refunds of nursing home charges.

The capital outturn in respect of the 2005 voted allocation amounted to €5,867 million (including €346 million of capital carryover into 2006). This was €141 million below the 2005 Revised Estimates allocation. In addition, in 2005 €236 million of capital was spent in respect of 2004 savings carried forward under the arrangements provided for in the 2004 Finance Act. The shortfall in capital cash spend, including carryover amounts, is primarily explained by slower than expected spending by the Departments of Transport and Environment, Heritage and Local Government, the Health Service Executive and the OPW.

Non-voted capital expenditure is in line with expectations. This includes €1,320 million paid to the National Pensions Reserve Fund.

Expenditure on Central Fund Services totalled €3,895 million in 2005 compared with €3,584 million in 2004. The difference is largely due to higher contributions to the EU Budget last year.