National debt charge to hit €4.6bn next year
THE COST of servicing the national debt is set to increase by €2 billion next year, according to figures in the pre-budget White Paper.
The Government will spend €2.6 billion on servicing the national debt in 2009, with this figure jumping to €4.6 billion next year, as it seeks to stabilise Ireland’s budget deficit.
The exchequer deficit will be €25.2 billion for 2009, with the Government seeking to narrow this figure to €21.9 billion in 2010, the White Paper on receipts and expenditure shows.
Ireland’s borrowing requirement will widen from 11.75 per cent of gross domestic product (GDP) this year – almost four times the European limit – to an anticipated 13.5 per cent of GDP next year. However, the Government expects a return to economic growth in the second half of 2010, which would mean tax revenues next year do not deteriorate much further, the White Paper indicates.
The Department of Finance forecasts that it will receive €32.5 billion in tax revenue in 2009 and almost this sum – €31.9 billion – in 2010. Receipts from income tax will rise slightly next year as more favourable economic conditions kick in. However, receipts from VAT and corporation tax will remain under pressure, the estimates suggest.
Government spending, expected to come in under target this year at €40.3 billion, will increase 6.6 per cent to €43 billion next year.
With Ireland’s jobless rate, currently 12.5 per cent, expected to remain high into 2010, spending by the Department of Social and Family Affairs is expected to swell from €10.6 billion this year to almost €13.6 billion in 2010, according to the estimates.
Several other Government departments will see their budgets jump next year, including the Department of Enterprise, Trade and Employment, which will see its budget increase 13 per cent to €1.1 billion.
However, the Health Service Executive’s spending is scheduled to fall from €11.4 billion to €11 billion, with the Department of Health and Children allocated spending of €445 million, compared to €450 million this year.
The Department of Education and Science’s budget will be maintained at €8 billion.
Spending by the Office of the Minister for Finance will increase 17 per cent to €75 million, while the Department of Transport’s budget increases 9 per cent to €581 million. The Central Statistics Office will receive €64 million next year compared to €50 million in 2009. The Courts Service will have a budget of €63 million next year, up from €46 million in 2009.
Spending at the Department of Justice, Equality and Law Reform will increase slightly to €425 million, while the arts, sport and tourism budget will be broadly flat at €392 million.
The €4 billion capital payment made to Anglo Irish Bank during the year is noted, but any further payments to the nationalised bank are not considered in the White Paper.
The Government also identifies a number of sources of non-tax revenue that will boost the State’s coffers next year. The largest of these is expected fee payments of €1 billion from the banks for their use of the Government bank guarantee scheme, which was introduced in September 2008.
“Surplus income” from the Central Bank is scheduled to more than double from €290 million to €640 million next year, while €140 million will be received from the winding-up of Ulysses Securitisation plc. Ulysses was a special purpose vehicle established in 1995 to raise money for the exchequer by issuing bonds guaranteed by the securitisation of local authority mortgage loans. These have now been repaid, with the surplus expected to accrue to the exchequer in 2010.