The Exchequer deficit has swelled to €14.7 billion, boosted by an outflow of €6 billion in payments to bail out the banks and weak tax revenues.
However, Minister for Finance Brian Lenihan said the rate of decline in overall tax revenue was falling, and measure introduced in April to shore up the country's financial position were having an impact.
The latest Exchequer figures, published this afternoon, show that tax revenues for the first six months of the year are 17.3 per cent down on the same point in 2008. The half-year deficit compares to a borrowing of €5.7 billion a year ago, with the €9 billion increase attributable to a mixture of tax shortfalls and payments to bail out AIB, Bank of Ireland and to nationalise Anglo Irish Bank.
While declines in tax revenues have eased a touch, helped by timing factors, overall receipts are still slightly behind the expectations of the Department of Finance for this point in the year.
Department officials said this €188 million shortfall on their expectations amounted to a 1.2 per cent differential. Tax came in behind forecasts under a number of heads, notably VAT and income tax. Corporation tax was slightly ahead of expectations, due in part to timing factors and in part to some companies paying more than the Department had anticipated.
The Minister for Finance, Brian Lenihan, said the numbers showed the rate of decline in overall tax revenue had "eased".
"There are still substantial targets in the months ahead so tax revenues will need to be carefully monitored as the year progresses," he added.
On the expenditure side of the public finances, the Government has spent slightly less than forecast for this point in the year. Total spending amounted to €22.9 billion, compared to €22.7 billion a year earlier. The Department of Finance said underspends had occurred in agriculture, education and social and family affairs. In general terms, spending is "on target", officials said.
Mr Lenihan said the "difficult but necessary" decisions taken in April's Supplementary Budget were taking effect.
"Stabilising the public finances is a critical part of the renewal of our economy," he said.
Fine Gael's finance spokesman, Richard Bruton, accused the Minister of trying to "spin" the figures.
"The returns for the first half of the year again demonstrate the deep hole in the public finances, over 90% of which the IMF (International Monetary Fund) has put down to Fianna Fail's poor domestic policy," Mr Bruton said.
"Taxpayers will take no comfort that this is Fianna Fail's second attempt to reach even this dubious position.
"And the direct consequence of the Government's budgetary strategy, whichconcentrated on raising taxes and slashing capital budgets, is unnecessarily high unemployment."
