The Minister for Finance has said he believes the level of financial support provided in the Budget will be sufficient to cope with the ongoing effect of Covid-19.
Paschal Donohoe’s comments were echoed by the Minister for Public Expenditure and Reform Michael McGrath at a press conference today.
Michael McGrath said allocations to government departments for Covid-19 in addition to a contingency fund and an economic recovery fund means there is approximately €12 billion in “firepower” available to use over the course of 2021.
Minister Donohoe said that Ireland had avoided “the worst challenge in relation to Brexit” and that tax figures out today showed the resilience of the economy.
The Ministers were speaking at the publication of Exchequer Returns for 2020.
The figures showed the public finances recorded a deficit of €19 billion last year, an improvement on a Budget Day forecast of €21.6 billion, but down from a General Government surplus of €1.4 billion in 2019.
At one stage last year, it was feared the deficit could rise to as much as €30 billion.
Today’s figures show an Exchequer deficit of €12.3 billion was recorded in 2020, a €13 billion deterioration on the previous year
The Exchequer figures show that total voted spending was up €13.7 billion or 25.3% on 2019. Current or day-to-day spending was up 26% with most of the increase spent on Health, up 18%, and Social Protection which was up 47%.
Tax revenues were down €2.1 billion or 3.6% compared to 2019.
This relatively good return from taxes, despite Covid, was helped by the receipt of almost €1 billion more than forecast in corporation tax and €575m more in stamp duty.
This latter amount relates to a once-off payment.
Income tax also held up despite Covid-19. Receipts were down €224m or just 1% on what was collected in 2019.
But VAT receipts were down €2.7 billion, or 18%, as consumers cut back on spending.
The Government is sticking to its Budget Day forecasts for the public finances in 2021 until it publishes an update in April.
Finance Minister Paschal Donohoe said the end-year Exchequer returns show the scale of Government intervention during the pandemic.
“From an expected surplus of around €2.5 billion before the pandemic struck, to an estimated deficit of €19 billion, the strength and depth of the Government’s response is unprecedented in our country’s history,” Paschal Donohoe said.
“Although we once again enter a difficult period of tough but necessary restrictions, today’s figures point to some positive underlying trends in the economy,” the Minister said in a statement.
“The Government will continue to use the resources of the State to protect the most vulnerable, support businesses and sustain incomes until our country emerges from this pandemic even stronger than before,” he added.
The Minister for Public Expenditure and Reform, Michael McGrath, said the figures published today show the full extent of the Government response to Covid-19 in 2020.
“Just under €5 billion was spent on the Pandemic Unemployment Payment in 2020 together with €4.1 billion for the Temporary Wage Subsidy Scheme and its successor the Employment Wage Subsidy scheme, demonstrating the scale of the government’s commitment to protecting household income for people across the State,” Michael McGrath said.
“Gross Voted Expenditure on Health grew by €3.4 billion to nearly €20.9 billion ensuring that the necessary resources were available to procure vital equipment, support vulnerable citizens and build a testing and tracing regime for the virus,” Mr McGrath said.
He said that Budget 2021 was based on a prudent “no vaccine” assumption and both the Recovery Fund and the Covid Contingency Reserve are designed to ensure the funding is in place to continue the national fightback against this unprecedented challenge.
“I welcome the international confidence in the Irish economy and our public finances as indicated by continuing very low Government bond yields which are supported by the actions of the ECB,” he added.