THE Government borrowed almost £410 million less in the first three of this year than over the same period in 1996, according to the latest figures from the Exchequer. The Department of Finance stressed, however, that the figures were "skewed" by special once off timing factors.

At the same time, the Central Bank has revealed figures which point to net interventions in the foreign exchange market between £200 million and £300 million in February.

Mortgage lending and consumer credit figures remain strong while retail sales were up 2.2 per cent in January and 7.4 per cent over the year.

According to Davy Stockbrokers' chief economist, Mr Jim O'Leary, the Exchequer figures imply the Government will have between £350 million to £400 million more in tax receipts at the end of the year than it had budgeted for.

The Minister for Finance, Mr Quinn, is keen that this money should be used to cut out borrowing ahead of the decline in EU payments at the turn of the century.

However, he is likely to be under significant pressure from spending departments as well as from extra pay claims and possible compensation for soldiers who have damaged their hearing.

Mr O'Leary, who was only £1 million out in his Exchequer Borrowing Requirement forecast, laid that, although the figures had been significantly distorted, there was no doubt that tax revenues were bounding ahead.

The Revenue took in £3.1 billion in the first three months, with £3.05 billion coming from tax. At the same time it spent £3.17 billion, leaving a current budget deficit of £69 million. When a capital budget deficit of £82 million is taken into account, the Exchequer Borrowing Requirement was £151 million.

Tax was up almost 16 per cent in the first quarter, however this was boosted by a £119 million carry over of VAT from last year. Allowing for this, tax receipts were up 11.5 per cent compared with a full year target of 6 per cent.

The Department pointed out that the £182 million in tax concessions from the Budget would slow down this growth in tax receipts later in the year. However, the impact will be less dramatic as tax cuts in the 1996 Budget also affected last year's figures from the second quarter on.

Income tax receipts were up 15.2 per cent, compared to a target for the year of 8 per cent. VAT receipts rose 29.7 per cent compared to a target of 11.5 per cent. Without the special carry over factors, VAT receipts were 14 per cent ahead.

Excise duties were 9.5 per cent higher against a target of 6.5 per cent.

However, corporation tax receipts were down 25 per cent compared with a full year target of 1.5 per cent. However, officials pointed out that up to £50 million which had been due on Good Friday was not paid until April.

Significant inflows of EU money allowed day to day spending to come in below budget. It grew by 3.4 per cent, compared to the target for the year of 6.6 per cent.

Cohesion funds of almost £25 million, compared to just £7 million at the same time last year and £20 million from the regional development fund against £513,810 last year made a substantial difference.

Social welfare spending is also significantly down with the live register some 22,000 lower than at the same time last year.

Monthly figures from the Central Bank show that its reserves are only up £40 million. However, this was affected by a £280 million foreign debt repayment.

The Central Bank statistics also showed that overall mortgage lending continued to grow at 14 per cent while private sector credit grew at 15.5 per cent from 15.2 per cent in January.