Minister for Finance Brian Lenihan tonight admitted the Government¿s fiscal position was "unsustainable" after Exchequer figures showed the deficit in public finances ballooned to €3.7 billion in the first quarter, a tenfold increase on the same period last year.
The Exchequer returns for March show the amount of tax collected by the Government in the first three months of the year is down 23 per cent or €2.6 billion on that collected in the same period last year.
The figures also showed spending was up 6 per cent or €680 million compared to last year due to the increased social welfare payments from the rising numbers of unemployed.
"There is no question that there has been a very serious deterioration in the public finances," Mr Lenihan said in a statement issued with the figures.
"The Government has already taken action to correct this unsustainable position and we must recognise that the budgetary position will take a number of years to correct."
The data shows an Exchequer deficit of €3.7 billion was recorded in the first quarter of 2009 compared to a deficit of €354 million last year.
The figures represent the last snapshot of economy before the Government's emergency budget next week.
Mr Lenihan needs to convince investors, ratings agencies and the electorate that he has a strategy for arresting the meltdown in public finances when he unveils his budget.
Without next week's emergency measures, Mr Lenihan said the budget deficit could hit 12.75 per cent of Gross Domestic Product (GDP) this year, above a previous estimate of 10.5 per cent and far and away the worst performance in European Union.
Mr Lenihan tonight also cut his estimate for this year's economic performance to a contraction of 6.75 per cent of GDP from a 6.5 per cent fall. This year marks the second straight year of recession and the worst on record.
Labour Party finance spokeswoman Joan Burton said it was clear the Government was "living in a dream world" in relation to the public finances.
"Less than three months ago, the Government forecast a 9.5 per cent deficit. Now they are saying that if things are left unchanged, this could be as high as 12.75 per cent. That's a €5 billion hole that has appeared in just 10 weeks.
"This shows just how steep a trajectory our economy is now on. The Government must ensure they don't send it off a cliff next Tuesday by taking €4-6 billion out of the economy."