Covid-19 crisis continues to impact the public finances
Impact of Covid 19, as set out in the Stability Programme Update, reflected in Exchequer fig as tax revenues fall and expenditure increases
• Today’s Exchequer returns show, as expected, the continued impact of the Covid-19 pandemic on the public finances.
• Tax revenues in April were down 8 per cent, or €223 million, on April last year.
• Excise receipts fell 50 per cent year-on-year, or nearly €300 million, reflecting reduced consumption and a fall in new car sales (VRT).
• At over €20 billion, net voted expenditure to end-April was ahead of profile by €2.4 billion, or 13.5%. In year-on-year terms, expenditure was up €3.8 billion, or over 23%.
• The rise in expenditure reflects increased departmental drawdown in response to the Covid-19 pandemic, particularly in the areas of health and social protection.
• An Exchequer deficit of €7.5 billion was recorded to end-April 2020.
Fiscal Monitor April 2020
An Exchequer deficit of €7,473 million was recorded to end-April 2020. This compares to a deficit of €3,192 million in the same period last year. The €4,281 million year-on-year deterioration in the Exchequer balance is primarily driven by increases in voted current and capital expenditure.
Tax receipts for the month of April amounted to €2,552 million, a decline of 8 per cent on April 2019. This is primarily attributable to a decline in Excise and Income Tax receipts. Cumulative tax receipts of €15,485 million at end-April were down 0.6% or €86 million annually, with strong returns in the first two months of the year compensating to some degree for the steep decline in receipts in March and April.
Total net voted expenditure to end-April, at €20,043 million, was ahead of profile by €2,379 million, or 13.5%. In year-on-year terms, this was up €3,820 million, or 23.5%. The rise in expenditure reflects increased departmental drawdown in response to the Covid-19 pandemic, particularly in relation to the Department of Health and the Department of Employment Affairs and Social Protection.
The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD said;
The Government’s Stability Programme Update published by the Department of Finance on 21st April, outlines a sharp deterioration in the public finances this year as a result of the Covid-19 pandemic. Today’s figures bear that out, with a fall in tax revenues and increase in expenditure. As I have said before, it is entirely appropriate that the Government uses fiscal policy to cushion the effect of the crisis in this way. It is a vital tool in helping to support individuals, businesses and communities through this difficult period. We began this crisis with the public finances in good health - a budget surplus, cash balances and reduced debt – all grounded in an economy that was growing strongly. The Government is committed to continuing to provide support to ensure our economy recovers as quickly as possible from this crisis.
Notes to editors:
• The forecast for tax revenue was set out in SPU 2020 in April;
• Tax revenue last year amounted to €59.3 billion;
• The April Fiscal Monitor incorporates the revised taxation profiles for 2020;
• Gross voted expenditure on public services and infrastructure last year amounted to €67.4 billion, including over €10 billion in expenditure funded from the Social Insurance and National Training Funds. This was composed of current spending of €60 billion (annual increase of 5.2 per cent) and capital spending of €7.4 billion (annual increase of 22.5 per cent).