THE SCALE of the financial crisis facing the country will become clear today with the publication of the exchequer returns, which are expected to show a dramatic shortfall of at least €1.5 billion in tax revenues for the first half of the year.
The Cabinet discussed the rapidly deteriorating financial situation yesterday, but final decisions on the strategy to deal with the issue will not be taken until next week's Cabinet meeting after Ministers have considered the official figures. The Taoiseach, Brian Cowen, confirmed in the Dáil yesterday that tax revenues for the first six months were down but he said exact figures would not be available until today. He added that the Minister for Finance Brian Lenihan had briefed the Government in general terms about the figures and would be issuing a statement after their publication.
"We will have a debate next week on the NDP [National Development Plan] and the economy, which will present a good opportunity for the Government to outline the general position. Given that tax revenues will be back from where we expected them to be because of the international financial situation, it will be necessary for us to work to our expenditure targets within the budgetary parameters we have set ourselves," said Mr Cowen.
He said there was a challenging time ahead for the remainder of this year and decisions would have to be taken in the context of the estimates for next year's expenditure targets.
"The Government is au fait with the general position and the Minister and his colleagues will determine the broad strategy to be adopted. The Government will make decisions promptly and appropriately and we will discuss them in the House," said Mr Cowen.
The Taoiseach was replying to the Labour Party leader, Eamon Gilmore, who insisted that tax revenues were down because of the Government's economic policies rather than the international financial situation.
Fine Gael deputy leader and finance spokesman Richard Bruton forecast last night that the mid-term exchequer figures were likely to be some of grimmest ever seen and he called on the Taoiseach and Minister for Finance to stop washing their hands and take concrete action.
"Brian Cowen sleepwalked the economy into recession. He ignored repeated warnings about over-dependency on the property boom, and failed to notice the steady deterioration in export performance. As minister for finance, Brian Cowen presided over the worst deterioration in the public finances in the history of the State," said Mr Bruton.
He called on the Taoiseach to set an example by immediately cancelling the Government's profligate pay rise, ending waste in the public sector and scrapping a number of unnecessary junior ministers.
Labour finance spokeswoman Joan Burton said that the Government had still not offered anything like a comprehensive analysis of the deteriorating economic situation.
"Instead, we get a slow drip-feed of information as if the Government hopes the people won't notice the recession creeping up on them. Introducing cutbacks by stealth is no way to conduct Government business."
Ms Burton added that without accurate information, it was difficult to plot a course back towards economic sustainability. She added that serious questions had to be asked about the ability of the Government to make accurate economic forecasts at all.
"In December 2006, Brian Cowen forecast growth for 2008 of 4.8 per cent. In December 2007, he revised it down to 2.8 per cent. Now the ESRI forecast that it will be minus 0.4 per cent. These erroneous forecasts have triggered a fiscal crisis in which it seems the poor, the sick and the handicapped will be made to suffer for the Government's mistakes," she said.