Eamon Gilmore
Question:33 Mr. Gilmore asked the Minister for Finance the projected end of year budget deficit or surplus based on the latest information available to his Department; and if he will make a statement on the matter. [12407/02]
Written Answers. - Exchequer Balance.
At budget time, the forecast for the 2002 Exchequer balance was for a surplus of €170 million. This estimate remains unchanged. Forecasts for the public finances are predicated on the level of activity in the economy. On budget day, an increase of 3.9% in gross domestic product in 2002 was forecast. Nothing which has occurred so far would lead me to change this view, which I feel is reasonable given the current economic climate.
The end-March Exchequer returns showed a surplus of €608 million during the first quarter of 2002. This compares to a surplus of €1,457 million for the same period in 2001 and, as I have already stated, a surplus of €170 million budgeted for 2002 as a whole.
The increase in tax receipts in 2002 over 2001 was forecast at budget time to be 8.6%. The end-March Exchequer returns showed tax receipts in the first quarter at €6.217 billion which is 20.5% of the budget day target. Year-on-year tax receipts, in the first quarter of this year, were 2.8% lower than the first quarter of 2001. However, it is important that this should be considered in the context of the budget day changes which will boost tax receipts later in the year. The standard rate of VAT will increase from 20% to 21% in March of this year and the impact of this increase should be evident from the May receipts onwards. The change in the corporation tax payment dates, which is estimated to yield almost €800 million this year, will increase receipts from June onwards.
As with tax receipts, it is difficult to draw conclusions for the year from one quarter's expenditure. Net voted spending in the first quarter was €6.102 billion compared to €5.210 billion in 2001 – an increase of 17.1%. This compares to a figure of 14.4% in the Revised Estimates Volume published recently. The rate of increase year-on-year dropped from 22.1% at end-January to 17.1% at end-March. Year-on-year spending can, however, vary from month to month influenced by both spending trends in the base year of 2001 as well as in the current year.
The general expectation is that the economy is recovering and that this should be reflected in tax revenues over the remainder of the year. Spend ing plans by Departments are being closely monitored to ensure that these come in on target. The overall end-year Exchequer position is, therefore, still as forecast on budget day.