Brian Lenihan Jnr (Dublin West, Fianna Fail)

Budget 2010 set out the forecasts for the general Government deficit for the period to 2014. The target for 2011 is for the general Government deficit to be 10% of GDP, which is an improvement over the planned deficit for this year of 11.5% of GDP. The most recently published fiscal data, the Exchequer returns for the first quarter, were broadly in line with expectations and demonstrate that the budgetary plan, as set out in budget 2010, is on track. Consequently, at this early stage of the year, there are no proposals to revise the targets.

The Exchequer deficit at the end of March 2010 was €3.9 billion compared to €3.7 billion at the end of March 2009. My Department published monthly targets for both tax revenue and net voted expenditure earlier this year. In regard to tax revenue performance, €7.2 billion in tax receipts was collected by the end of March. This was 15% below the same period in 2009 and was €266 million, or 3.5%, below target. A significant year-on-year decline is expected in the initial months of 2010, with tax revenues forecast to end the year 6% down on 2009. The overall tax revenue target for 2010 is just over €31 billion and, based on the information available so far this year, this target remains valid.

Total net voted expenditure at the end of March 2010 was €10.7 billion, representing a decline of some €1.1 billion or 9.2% on the same period in 2009. This significant year-on-year reduction reflects both the expenditure policy changes which the Government has implemented and also, to a lesser extent, timing issues. The Revised Estimates volume, published on 18 February, projected a 1.9% reduction in total net voted spending for 2010 as a whole.

In budget 2010, my Department estimated that the general Government deficit for 2009 would be 11.7% of GDP. The estimate for the headline deficit for 2009 has now been revised to 14.3% of GDP. The difference between these two estimates is 2.6% of GDP, of which 2.5% of GDP relates to the technical reclassification of the €4 billion transfer to Anglo Irish Bank made in 2009. It is important to note that on foot of this reclassification, no additional borrowing has taken place and the underlying position of a deficit of 11.8% of GDP for 2009 is broadly the same as that published in the budget last December. This technical reclassification has a once-off impact on the headline deficit. As such, it does not affect the Government's forecasts for the level of debt, or the forecasts for debt servicing costs, as the €4 billion had already been taken account of in the budgetary debt position. Furthermore, the fiscal consolidation plan as set out in the budget is not impacted by the reclassification.

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