Despite booming tax revenues, the Exchequer's finances are likely to be looking less healthy at the end of the year than this week's figures would suggest. Traditionally, tax receipts are most robust in the last quarter and, with the current budget surplus already running at £736 million, an end-year surplus of more than £1 billion may be recorded. When borrowing to fund capital spending is subtracted, this could leave an overall surplus on the Exchequer Borrowing Requirement (EBR) of anything up to £300 million. That, however, would be without the intervention of the Department of Finance.

The official Budget forecast is for an overall deficit of £637 million. However, the Central Bank yesterday revised this to £300 million, which it admitted could be pessimistic. Indeed, most commentators agree the most likely outcome will be for an EBR of close to zero. Spending would have to pick up dramatically over the next four months for the original forecast to prove correct.

The Department, and of course the Minister, Mr McCreevy, would much prefer to see a somewhat less healthy Exchequer report at the end of the year. For one thing, it would help to dampen Budget expectations. Also, if money which would normally be paid next year can be brought forward to this year, the task of meeting the Government spending targets will become easier.

With pressure from the unions already building for a bigger-than-negotiated tax package, as well as spending pressure from a variety of sources ranging from scientific funding to public sector pay rises, Mr McCreevy will be keen to keep a cap on the amount seen to be available.

Many are already complaining that when the State's finances were in the red, they were told no money was available. Now they are in the black, people are told it would be too inflationary for the money to be given out. While this does make some economic sense, it is not difficult to see their point of view.

To keep the surplus from appearing too large in recent years, the Department has been employing the useful wheeze of bringing provision for future liabilities into current spending. This then reduces the surplus on the borrowing requirement, as well as effectively cutting debt.

Last year, for instance, around £100 million was put aside for future pension liability at the old Department of Posts and Telegraphs with another £100 million used up in funding Post Office accounts.

Neither would normally be paid out of the current account. There are numerous items which can be brought into current spending to reduce future liabilities.

As one senior economist said last week, the Exchequer Borrowing Requirement at the end of the year will be exactly what the Department wants it to be.

There is also some question about the level of capital borrowing. A capital borrowing requirement at the end of the year of £830 million has been budgeted. However, by the end of June capital borrowing was running at only £248 million.

This is a notoriously difficult figure to estimate. Much depends on the timing of receipts from Brussels and, as a result, it is possible for the budgeted figure to be up to £300 million out.

However, the pattern of capital spending to date this year suggests it is more than likely to come in below Budget. Mr McCreevy has already hinted as much.

Most commentators believe it is most unlikely that the Department will allow an overall Exchequer surplus this year. The Minister himself has consistently stressed it is not in prospect for at least two or three years. And if he decides that the Exchequer finances will not move into overall surplus, then they will not.

However, this may be the last year before we officially see the State's finances booming at year-end. The Department will probably have no option but to allow a surplus next year and for a few years after that. This will be more than welcome in the run-up to a cut in Brussels funding post-1999 and the entry into monetary union.