The end-June Exchequer returns showing total Exchequer borrowing of £647 million in the first half of the year were broadly in line with expectations and compare very favourably with the position at the same stage last year. Tax receipts are performing satisfactorily, and although the 9 per cent increase on the yield during the first six months of 1991 will drop back as the year progresses, there should be a margin sufficient to cover much of the emerging upward pressure on social spending. In any event, the Government are reviewing the potential for securing savings so as to ensure that expenditure will be held as closely as possible to the budget provisions. In consequence, I do not expect the EBR out-turn to exceed significantly the budget target.
As I indicated in my statement on their release, the end-June returns provide further evidence that the Irish economy continues to turn in a creditable performance against a difficult international background. They indicate that the view of economic prospects that underpinned the 1992 budget is being substantially borne out. I am particularly pleased by the confirmation the revenue returns give, in the payroll-related components, that employment is holding up well. Nevertheless, the unfavourable economic trends abroad, whose knock-on is directly affecting the unemployment figures, undoubtedly make it more difficult to achieve the employment gains we need. For that reason, it is vital to preserve the domestic conditions that were of decisive importance in reviving growth and turning around employment over the past few years — especially the budgetary discipline.
I am well aware of the challenge that faces me in framing a budget for 1993. I have already acknowledged that the slow international recovery, with its indirect implications for certain spending areas, makes for a more difficult scenario than had been anticipated last autumn. Moreover, there are, as the question recognises, additional pressures arising from certain factors that come into play in 1993, particularly on account of the EC internal market.
I can assure the Deputy that notwithstanding these pressures the Government are determined to bring in a budget which both accords with the need for prudent management of the public finances, keeping us on course for participation from the outset in European Monetary Union, and otherwise contributes to economic and social progress. As regards the ending of VAT at point-of-entry on goods sourced in other EC member states, I have already announced my intention to provide in a supplementary 1992 Finance Bill for measures to offset its adverse implications for Exchequer cash-flow. The Government's commitment to ensure that public expenditure for 1993 is kept within the tight bounds necessary in these circumstances is also made clear in the strict parameters that I have laid down in the Estimates circular recently issued to Departments.