State’s deficit for 2015 revised following GDP growth - CSO

The State's headline budget deficit for 2015 has been revised from 2.3 per cent to 1.8 per cent following Tuesday's GDP growth figures from the Central Statistics Office (CSO).

Central Bank governor Philip Lane raised concerns about the figures which revised GDP growth in 2015 up to 26 per cent.

In its summer economic statement last month, the Government said the deficit in 2015 was 2.3 per cent of GDP. New figures from the CSO on Wednesday record the general Government deficit at €4.6 billion in 2015, or 1.8 per cent of GDP.

The deficit figure has been revised since first estimates published in April put it at €4.9 billion. The CSO said the revision was “mainly due to methodological or technical changes”.

The 1.8 per cent deficit was “an improvement” on the 2014 position of €7.2 billion, or 3.7 per cent of GDP, the CSO noted.

The office cited an increase of over 7 per cent in Government revenues, which grew from €65.8 billion in 2014 to €70.6 billion in 2015, and the “substantial increase” in GDP in 2015 as the “two main factors” leading to the fall in the deficit as a percentage of GDP.

The increase in revenue was partially offset by an increase of €2.2 billion in expenditure.

The factors driving growth in Government revenue for 2015 were primarily increases in tax and social contribution revenues, partially offset by reductions to investment income.

Some €4.3 billion was raised in additional taxes in 2015, comprising €3 billion of direct taxes and €1.3 billion of indirect taxes.

The incre2ase in expenditure was said to be mainly due to a once off capital injection expenditure which arose when the Government converted part of its holdings in preference shares in AIB to ordinary shares in late 2015.

Central Government collected €67 billion, or 95 per cent, of total revenue in 2015. The balance was generated by local government in the form of commercial rates, social housing rents and other transfers.

In terms of expenditure, €72.3 billion was spent by central Government in 2015. This resulted in a deficit in central Government of €5.3 billion.

Local Government recorded a surplus of €697 million in 2015. This was primarily due to a capital transfer from the exchequer to local authorities to redeem water related loans.

These balances combine to make up the deficit for general Government of €4.6 billion, or 1.8 per cent of GDP in 2015.

Separately, the CSO’s financial statistics for the first quarter of 2016 indicate that at the end of March, general Government gross debt increased by €5.5 billion to stand at €206.8 billion, or 80.4 per cent of GDP.

This compares to a debt level of 97.1 per cent of GDP for the same period in 2015. It added the fall in the ratio was due to increased GDP.

General Government net debt was €173.3 billion, or 67.4 per cent of GDP, at the end of March. This represents a worsening of the net debt level of a year earlier which stood at €167.2 billion.