Bloomberg News

Irish Deficit Widens to 22.2 Billion Euros on Bank Payments

November 02, 2011

(Updates with comment from economist in fourth paragraph.)

Nov. 2 (Bloomberg) -- Ireland’s budget deficit widened to 22.2 billion euros ($30.5 billion) in the 10 months through October, following state injections into the financial system.

In the year-earlier period, the shortfall was 14.4 billion euros, the Finance Ministry in Dublin said in an e-mailed statement today. The underlying deficit, excluding bank payments and the sale of a state stake in Bank of Ireland Plc, was more than 1.8 billion euros lower than a year ago, it said.

Ireland’s government, seeking to cut its deficit to below 3 percent of gross domestic product by the end of 2015, has said it will beat its target of reducing the country’s shortfall to about 10.6 percent of GDP this year. The Finance Ministry may this week shave at least 1 percentage point off its current 2.5 percent economic forecast for 2012 amid a global slowdown, two people familiar with the matter said Oct. 28.

“Overall, these latest Exchequer figures are somewhat disappointing, particularly in relation to the tax side,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. “The domestic economy remains extremely weak and the government needs a turnaround in private demand if it’s to reach the sort of annual growth rates necessary to make inroads into its debt burden.”

While tax revenue rose 8 percent in the first 10 months of the year to 26.7 billion euros, that’s 0.7 percent below forecasts, weighed down by a 4.5 percent target shortfall in sales tax, according to the ministry. Income tax was 1.2 percent below target, it said.

The increase in the headline deficit figure was due to 3.1 billion euros of payments to Anglo Irish Bank Corp. and Irish Nationwide Building Society and 7.5 billion euros in one-time injections in other banks in July, the ministry said. Anglo Irish and Irish Nationwide merged in July and renamed Irish Bank Resolution Corporation Ltd. last month.

The figure also reflected a 1 billion euro in capital receipts from the sale of part of the state’s stake in Bank of Ireland in July, it said.

Editors:

--Editors: Simone Meier, Andrew Atkinson

To contact the reporters on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net; Finbarr Flynn in Dublin at fflynn3@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus