The following statement was issued today (Wednesday, 2^nd April, 2008) by the Tánaiste and Minister for Finance, Mr. Brian Cowen, T.D.

An Exchequer deficit of €354 million was recorded in the first quarter of 2008. To end March tax revenue was €600 million or 5.1 per cent behind the published profile. Expenditure was broadly in line with target at €66 million or 0.6 per cent under profile.

Commenting on the results for the first quarter, the Tánaiste and Minister for Finance, Brian Cowen, TD, noted that:

“Since the early part of this year, some of the international risks identified at Budget time have materialised, specifically in relation to the weaker international economic environment, developments in oil prices and the movements in the dollar and sterling exchange rates. In this context, the performance of income tax which is up 5% year-on-year is welcome as an indicator of the resilience of the Irish economy.

Overall tax receipts were €600 million, or 5.1% behind target in the first three months of 2008. Over half of this shortfall is due to the poor performance of Capital Gains Tax which reflects the more adverse conditions in equity and property markets. The next key payment date for CGT is at the end of October. At this stage it is not expected that this tax shortfall, particularly in CGT, will be recouped later in the year. It is important to point out that I believe that the current situation is manageable given the strong position of the public finances such as our low debt to GDP ratio. My Department will continue to closely monitor overall tax performance over the coming months as a clearer trend emerges.

Investment in key capital expenditure is slightly ahead of profile for the first quarter, due mainly to better than anticipated progress on a range of capital spending projects, arising under the National Development Plan. For example, the N11 Kilpedder-Delgany Interchange was opened on time and within budget; 40 new intercity rail cars were delivered in this quarter, bringing the total already delivered to date under the NDP to 112. A new Community Nursing Unit in the Phoenix Park, providing 100 beds for older people, was also completed in the first quarter. This is real evidence of this Government’s commitment to continued investment in our economic and social development.

It is crucial that the agreed budget spending limits are adhered to this year. As I indicated at Budget time the rate of increase in current spending over the medium term must be managed carefully and kept within available resources. I intend to do this.”

Revenue

Total current receipts in the first quarter of 2008 amounted to €11,227 million compared to receipts of €11,954 million for the same period in 2007.

Tax Revenue, at €11,107 million is €600 million, or 5.1 per cent, behind profile at end-quarter due mainly to the poor performance of Capital Gains Tax. Income Tax is above profile. Capital Gains Tax and VAT are behind target, at -€311 million and -€253 million respectively.

Non-tax revenue in the first three months of 2008 was €120 million. This compares to €108 million for the same period last year and is in line with expectations.

Capital receipts for the first three months amounted to €1,261 million compared with €844 million for the same period last year. This is as expected.

Expenditure

Total net voted spending at €11,142 million at end-March was €66 million or 0.6 per cent below the published profile. Year-on-year growth in the first quarter 2008 was 13 per cent. The Revised Estimates provide for an increase of 9.5 per cent for 2008 as a whole.

Net voted current spending in the first three months of 2008 at €9,553 million was €132 million or 1.4 per cent below the published profile. Year-on-year growth in the first quarter 2008 was 7 per cent. The Revised Estimates provided for an increase of 9.1 per cent for 2008 as a whole.

Net voted capital spending in the first three months of 2008 at €1,589 million, was €66 million or 4.3 per cent above the published profile. When compared with the end first quarter period 2007 the increase was 80 per cent or €706 million. Issues for net voted capital expenditure to end-March 2008 indicate strong progress on a number of key investment projects.

Non-voted capital expenditure in the first quarter of 2008 was €423 million which is in line with expectations.

Expenditure on Central Fund Services totalled €1,277 million in the first three months of 2008 compared with €701 million in the same period last year. This is as expected.