The latest data from the final exchequer returns suggests that Ireland’s budget deficit came in very close to its 0.9% of GDP target in 2016.
Final confirmation will not be available until March, but Goodbody Stockbrokers predict the numbers published yesterday evening show that the deficit came in slightly below the forecast outturn from the Budget last October.
This represents the seventh consecutive annual fall in the budget deficit from its peak of 12% of GDP in 2009.
They claim the progress could have been even more significant were it not for another year of spending creep over the final months of the year. Having been €784m below expectations in the first
eleven months of 2016, spending finished €406m above expectations for the full year, due to a spending surge in a number of different areas of current and capital spending.
Goodbody say these decisions were triggered by an outperformance of tax receipts during the year. Tax receipts did outperform original expectations (by €639m), but disappointed relative to the
forecasts set out in the Budget in October by €250m. For the full-year, corporate tax receipts accounted for all of the overshoot, but this category can be volatile.
According to Goodbody Stockbrokers, "It was another year of progress for the Irish public finances, but this does not mean that Ireland is out of the woods completely in relation to its debt/deficit position. Tax revenues finished the year up by 5%, having been up by 9% yoy at the half-year. It may have been wiser to save some of the windfall rather than spend on some recurrent spending projects."
Source: www.businessworld.ie