The Department of Finance has increased its prediction for the annual surplus on the Government's finances, which it now expects to be £750 million this year. In a statement issued last night, the Department said that on the basis of November tax figures, it now expected that revenues for the year would be £75 million more than predicted in the Budget earlier this month.
Along with some other small changes, this means it has revised up its forecast for the exchequer surplus of revenue over spending for the year to £750 million, from £668 million on Budget day. Unless a large level of exchequer spending is undertaken this month, the final surplus could end up even higher, sources believe.
The Department was responding to an Irish Times interview given by the chief executive of the National Treasury Management Agency, Dr Michael Somers, in which he pointed to the large gap between the exchequer surplus of £1.9 billion at the end of November and the £668 million prediction for the surplus for the full year. To bridge the gap between the two figures, huge amounts would need to be spent by the exchequer this month. Dr Somers said he was "mystified" by the figures. His figures showed the national debt now to be around £28.3 billion, while the Department end-year target remains unchanged at £29.7 billion. Last night in Vienna, the Minister for Finance, Mr McCreevy, insisted there was "no actual contradiction between the NTMA and the Department of Finance". He said a high level of Government spending would take place in December, which would reduce the exchequer surplus for the full year from the end November figure. The Minister said the Budget programme for all Departments to pay out at the end of 1998 is £12,899 million. They had paid out only £10,788 million at the end of November. This implied that in December, spending of £2,111 million, or 16 per cent, of all expenditure for the year would have to go out, including extra money from the Christmas welfare bonus and the Science and Technology fund.
Earlier, the Fine Gael spokesman on Finance, Mr Michael Noonan, had called on the Minister to explain, as a matter or urgency, the discrepancy in the figures. The Labour leader, Mr Ruairi Quinn, said the reputation of either the Department or the NTMA would end up seriously damaged.
Meanwhile, the Central Bank, responding to Dr Somers's comments that it was not facilitating a modern dealing system in Government bonds, said it had set up a study group to look into developing the bond market and was seeking to instigate change and development.