Quarterly Bulletin Q3 2013

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28 The Domestic Economy Quarterly Bulletin 03 / July 13 Table 8: Summary of Exchequer Returns, June 2013 June 2012 €m June 2013 €m Change €m Current Revenue – Tax revenue 17,014 17,599 +585 – Non-tax revenue 1,726 1,897 +171 – Capital Receipts 1,452 2,519 +1,067 Total 20,192 22,015 +1,823 Expenditure – Voted expenditure 22,422 20,973 -1,449 – Non-voted expenditure 7,214 7,635 +421 Total 29,636 28,608 -1,028 Exchequer Balance -9,443 -6,593 +2,850 of which Current Budget Balance -8,028 -7,624 +404 of which Capital Budget Balance -1,416 1,031 +2,447 Source and Application of Funds – Total Borrowing/Repayments -13,541 -38,364 – Promissory notes issues to IBRC 3,060 0 – Bonds issued to CBI on Liquidation of IBRC 9 0 25,034 – Total Increase in Exchequer Deposits 1,038 6,737 Exchequer Balance -9,443 -6,593 9 These bonds replace the promissory notes previously issued to IBRC. Department of Finance anticipates that the debt to GDP ratio will reach a peak of 123.3 per cent this year before declining gradually in the following years, falling to 117.4 per cent of GDP by 2015. The IMF and European Commission also expect gross debt to peak this year. Exchequer Returns The latest data reveal that the Exchequer ran a deficit of €6.6 billion in the year to June, down from €9.4 billion in the corresponding period of 2012 (see Table 8). This was a better than expected outturn for the first half of the year. The annual improvement reflected favourable developments in both revenue and expenditure; the former was boosted by higher tax receipts and income received from the sale of the contingent capital notes in Bank of Ireland, while the latter reflected a strong reduction in net voted expenditure and bank support payments. Taking a closer look at the revenue side, tax receipts recorded an annual increase of 3.4 per cent in the first half of the year and, when earlier than anticipated property tax flows are excluded, were marginally ahead of profile. There were contrasting developments in the ‘big four’ tax heads. Income tax and corporation tax have recorded strong annual growth, with the former in line with its target and the latter well ahead of expectations. VAT and excise, on the other hand, were broadly unchanged from the first half of last year and, as a result, have fallen below profile (see Chart 11). Non-tax revenue recorded an increase of €1.2 billion, as capital receipts were boosted considerably by the €1 billion sale of the State’s contingent capital notes in Bank of Ireland. The first six months of the year also saw stronger than expected Central Bank surplus income and higher dividend payments. These more than compensated for declining income from the Eligible Liabilities Guarantee (ELG) scheme
The Domestic Economy Quarterly Bulletin 03 / July 13 29 following the Government’s decision to close it to new liabilities from the end of March. Combined, these developments resulted in total revenue increasing by €1.8 billion year-onyear. On the expenditure side, a strong decline in net voted spending comfortably outweighed an increase in non-voted outlays. Focusing on the former first, total net voted expenditure was €1.4 billion lower on an annual basis and 2.5 per cent below profile, as both current and capital spending came in below expectations. All but one vote group was below profile by mid-year, with the biggest divergences from target – in nominal terms - occurring in Health and Environment. The €421m increase in nonvoted expenditure, meanwhile, was driven by €939 million of ELG payments arising from the liquidation of IBRC and a significant increase in debt servicing costs; factors partly offset by last year’s €1.3 billion acquisition of Irish Life falling out of the base. Taking account of all of these developments, total expenditure recorded an annual contraction of €1 billion from the same period in 2012. Focusing on the medium-term, in June it was confirmed that the average weighted maturity of programme loans made to Ireland from the European Financial Stability Facility (EFSF) and the European Stabilisation Mechanism (ESM) would be extended by up to seven years. Combined, these facilities have committed to just over €40 billion of the €85 billion package of financial assistance for Ireland. This significant decision will have a favourable impact on funding needs in the coming years, smoothing the national debt redemption profile and supporting a return to full market based financing. It is expected to remove a market financing requirement of around €20 billion over the period 2015 to 2022, with the funding requirement for 2015 being reduced by over €6 billion. Exchequer Financing From a funding perspective, the Exchequer returns show that the deficit was financed by net government borrowing of €13.3 billion in the first half of the year. Accordingly, excluding the bonds issued to the Central Bank on the liquidation of IBRC, there was a €6.7 billion increase in Exchequer cash balances over the period (see Table 8). This reflects a strategy to increase cash buffers before the financial assistance programme ends this year. Government borrowing was sourced from both the market (€7.7 billion) and through the programme (€5.7 billion); for the year as a whole around two-thirds of the total financing needs are expected to come from market sources.
Page 1: JULY 13 Q3 Central Bank Quarterly B
Page 5 and 6: Contents Section 1 Forecast Summary
Page 7 and 8: Section 1 Quarterly Bulletin 03 / J
Page 9 and 10: 7 Comment Annual National Accounts
Page 11 and 12: 9 The Domestic Economy Overview n A
Page 13 and 14: The Domestic Economy Quarterly Bull
Page 29: The Domestic Economy Quarterly Bull
Page 33 and 34: 31 An Timpeallacht Gheilleagrach Le
Page 35 and 36: 33 Financing Developments in the Ir
Page 37 and 38: Financing Developments in the Irish
Page 55 and 56: 53 Developments in the Internationa
Page 57 and 58: Developments in the International a
Page 73 and 74: 71 EU-IMF Financial Assistance Prog
Page 75 and 76: EU-IMF Financial Assistance Program
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Page 79 and 80: 77 Developments in EU Financial Ser
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Developments in EU Financial Servic
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Developments in EU Financial Servic
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Section 2 Quarterly Bulletin 03 / J
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Analysis of Recent Monetary Operati
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Section 3 Quarterly Bulletin 03 / J
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Statistical Appendix Quarterly Bull
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