Tomás MacGiolla
Ceist:9 Tomás Mac Giolla asked the Minister for Finance the reason for the 33 per cent increase in Exchequer borrowing for the first three months of this year compared to the same period in 1989.
Ceisteanna—Questions Oral Answers - Increase in Exchequer Borrowing.
The increase in Exchequer borrowing for the first three months of this year compared to the same period in 1989 was due to a number of special factors. These were as follows: delays in European Social Fund receipts; higher than anticipated health expenditure due to the impact of the increased incidence of influenza in the early part of the year and to a greater than usual run-down in health board overdraft facilities; and a disruption in the flow of revenues from training and employment levy, due to an industrial dispute which has since been resolved.
As I explained in the press release which accompanied the end-March Exchequer returns and again in my Second Stage Finance Bill speech, the timing factors should correct themselves as the year progresses. When they are discounted, the underlying picture shows that Exchequer borrowing for the first three months of 1990 was broadly in line with the budget forecast.
However, there is no room for complacency in regard to the public finances and, as I have already said, the Government will be monitoring trends closely over the remainder of the year in the light of developments at home and abroad to ensure that the budget targets are achieved again in this year.
How can the Minister say that the returns for the first quarter — which appear to be 89 per cent of the annual target — are on target when at the same stage last year they were only 66 per cent of the annual target? These figures show that the Minister is running way ahead of himself. Does he not agree that there could be another 'flu epidemic or some other problem in the health service, which can arise at any time, and that the best course of action is for him to give proper funding to the health service at the beginning of the year?
I want to give the Deputy and the House information which will help to bring the figures closer together. The misalignment between expenditure and revenue during the first three months arose in part because of the delay involved in the pay-over of training and employment receipts due to an industrial dispute in the Department of Labour. This dispute gave rise to arrears of £17 million which should have been in during that quarter but were not. These receipts have now been received into the Exchequer. That item has been corrected.
On the expenditure side, two main factors affected the first quarter supply issues: a delay in European Social Fund receipts amounting to £33.5 million relating to third level education — which were expected and budgeted for in the March quarter, and these receipts are expected in the next week or so — this is another self-correcting item — higher than anticipated expenditure on health, reflecting the impact of the 'flu epidemic at the beginning of 1990, and the financing operations of the health agencies in the first quarter. They ran down their over-drafts to an exceptional degree of £30 million more than normal to put themselves in a stronger position negotiating with the banks and transferring some of their interest charges from the health boards back onto the Exchequer. This too will correct itself throughout the year.
The end of April figures show a recovery from the position at the end of March. If the Deputy adds up all the figures I have given him and then looks at the April figures he will see that the EBR at the end of April amounted to £379 million as against £429 million for the first four months of 1989. The correcting measures are there, and I can assure the Deputy and the House that if any corrective action is required during the year it will be taken.
Deputies Noonan (Limerick East) and Mac Giolla rose.
I will allow Deputy Mac Giolla a very brief question and then I will call Deputy Noonan.
May I ask the Minister if the current budget deficit for the first quarter is running way ahead of the annual target as a result of these factors?
As I said, expenditure affects the current budget deficit — £33.5 million in regard to the Social Fund, £17.5 million from the Department of Labour and £30 million from the health boards; these affect the current budget deficit the same as EBR.
I am aware of that, but the increase in a current budget deficit from £260 million to £364 million in a quarter is way beyond the £100 million the Minister is talking about. Has the Minister brought that into line?
I have given the figures which bring it up to £88 million or £90 million, which means there is very little difference.
A brief question from Deputy Noonan.
(Limerick East): Does the Minister reject the view of most economic commentators that his borrowing requirement will exceed his estimate by about £50 million at year end?
Absolutely.
(Limerick East): Can I take it from his reply to Deputy Mac Giolla's penultimate question that he is prepared to bring in a mini-budget, if necessary, to adhere to his targets?
The Deputy must not have been listening to the answer I gave.
(Limerick East): I asked if corrective action would be taken.
I said the Government will continue to monitor the situation throughout the year and if corrective action is necessary, it will be taken. I do not anticipate that corrective action will be necessary at this stage because the figures to the end of April are broadly in line with the budget.
(Limerick East): Will the Minister bring proposals before the House if corrective action is necessary?
Ceist a 10.
One can take corrective action other than by coming before the House.
(Limerick East): A safety net?
We can have savings and things like that.