EU, IMF officials back in Ireland

 

A delegation from the European Union and the International Monetary Fund (IMF) is back in Ireland today to inspect the State’s finances.

The visit comes as new figures published yesterday show that the gap between tax revenues and Government spending soared in the first three months of the year.

The 10-day mission also coincides with a diplomatic charm offensive by Tánaiste and Minister for Foreign Affairs Eamon Gilmore to promote Ireland’s case for cheaper bailout loans.

The rounds of talks will start this week with a series of meetings between Mr Gilmore and EU ambassadors.

Elsewhere, Minister for Finance Michael Noonan is to meet his EU counterparts in Hungary later this week to brief them on plans to inject another €24 billion into failing banks and shrink the sector from six lenders to two so-called pillar banks.

A spokesperson for the Department of Finance said Mr Noonan would continue the Government's approach to building support on a lowering of the rate on the European Union part of the country's bailout.

"The Government will continue to pursue this issue through all channels and would expect a resolution of the issue to be achieved over the coming months," the spokesperson said.

Officials from the EU and IMF arrived in Dublin yesterday and will today begin their assessment of whether Ireland has adhered to the terms of the package set out last November.

They are expected to meet Government Ministers and officials, mainly from the Department of Finance, in the course of their visit. The teams are scheduled to stay until Friday week.

In these talks, the Government will seek to change some of the terms of the bailout.

Minister for Enterprise, Jobs and Innovation Richard Bruton said yesterday: “The IMF have made it clear from the very start that they will support changes in the package of measures.

“We’re looking to rejig the package in order to have a more pro-employment approach and that’s at the heart of the strategy that has been developed by Government.”

Responding to the publication of the tax and spending figures, Minister for Finance Michael Noonan said: “While the weakness in certain taxes is a concern, the overall exchequer targets set in the budget remain valid at this point in the year.”

The increase in the deficit was largely the result of payments to cover the losses made by Anglo Irish Bank and Irish Nationwide Building Society.

The cash cost in the first three months of the year was €3.1 billion.

In the first quarter of 2011, the spending of most Government departments fell on a year earlier.

However, because the largest spending departments all recorded sizeable increases, total expenditure rose.

Spending at the Department of Health and Children increased by almost 10 per cent, to reach €3.5 billion.

At the Department of Social and Family Affairs, expenditure increased by almost 20 per cent, to €3.1 billion. The Department of Education and Science registered an increase of almost 11 percent, to €2.1 billion.

Partially offsetting the increases in spending in the first three months of the year were higher tax revenues. Compared to the first three months of 2010, the total tax take was 3.7 per cent higher.

Most of the increase was accounted for by stronger income tax returns, which include revenues from the universal social charge.

With higher tax rates taking effect at the beginning of the year, total income tax revenue in the first three months stood at €2.9 billion, up almost 10 per cent.

A number of other taxes fell over the same period. Value added tax declined by more than €100 million on the first quarter of 2011, to stand at €3.1 billion.

Separately, an inspection team for Greece's international lenders have begun a three-day visit and will press the country to deliver on promises to make extra budget savings over the next three years and speed up privatisations.

Greek officials have said that two thirds of the measures being considered for the 2012-2014 budget plan would focus on spending cuts and one third on revenue increases.

The country must overall achieve savings of about 8 per cent of GDP in 2012-2014 to meet targets set by the lenders when they rescued Greece from bankruptcy last year.

Additional reporting: PA, Reuters, Bloomberg