Barry Cowen
Question:66. Deputy Barry Cowen asked the Minister for Finance his assessment of the current state of the public finances. [44798/21]
View answerTuesday, 21 September 2021
Questions (66)
Written answers
The Government's counter-cyclical approach to budgetary policy has - rightly - helped to absorb most of the impact of the pandemic. Government has deployed significant resources to limit the economic, health and societal fall-out from the necessary public health restrictions, and this was possible because of fiscal surpluses recorded in years preceding the pandemic.
Our successful vaccination programme has allowed for a gradual re-opening of the economy since the spring, and this has given rise to rapid economic recovery. The improving economy has, in turn, been an important tail-wind for the public finances. The most recent Exchequer returns showed a deficit of €6.7 billion was recorded at-August; this represents a €2.8 billion improvement on the same period last year. That said, although on a 12-month rolling basis, the deficit stands at €9.5 billion, so we cannot be complacent.
The year-on-year improvement in the deficit is primarily down to an over-performance in tax revenue, with income tax, corporation tax and VAT performing strongly. A general government deficit of around €20 billion (just over 5 per cent of GDP, 9.4 per cent of GNI*), was projected in the Summer Economic Statement. Given the over-performance on the revenue side, it is likely that the outturn will be lower than this. A revised deficit forecast will be published as part of Budget 2022 .
Budgetary policy must adapt to the changing public health situation. With mass immunisation and most sectors now re-opened, we must tailor our fiscal strategy accordingly. Our public debt stands at nearly a quarter of a trillion euros and, while we can absorb this, we can only do so if we slow, and eventually stop, the pace at which we add to it.
Accordingly, our strategy for Budget 2022 will be to begin reducing the gap between expenditure and revenue while continuing to invest in public services. On current estimates, by 2023 we will only borrow for capital investment.
Question No. 67 answered orally.