Weak tax revenues continue to put pressure on the Exchequer finances, according to new figures published yesterday.
The figures show there is a sharp slowdown in spending growth as the Government strives to hold down borrowing.
Opposition politicians last night accused the Government of delaying investment projects and squeezing public services in an attempt to meet its Budget targets.
The Government had to borrow €1,240 million to bridge the gap between revenue and spending in the first five months of the year, according to the Department of Finance figures.
This compared to a surplus of €55 million in the same period last year.
Weak tax revenues are the main source of pressure, with receipts in the first five months running 5 per cent ahead of last year, compared to expectations of a 7 per cent increase.
Income tax receipts are running 10 per cent below last year, but VAT receipts - supported by strong new home sales - are buoyant.
Spending is also running below Budget projections. Total voted spending in the first five months of just under €11,600 million is 5 per cent below projections at the start of the year. Spending in most departments is below target, while overall capital investment spending at €1,354 million is running 14 per cent below 2002 levels.
Spending growth slowed sharply in May. A Department of Finance spokesman said timing factors always have an influence from month to month.
Economic forecasters said that the Government would have to keep spending under tight control if it was to meet its end of year borrowing target of €1,870 million.
The first phase of benchmarking payments to public servants falls due over the coming months, which will push spending higher but will also boost income tax receipts.
The department spokesman said that the end-year borrowing target would be examined in the context of updated economic growth forecasts, due in August. As the Department may cut growth forecasts, the Government may come under pressure to either increase its borrowing target or cut spending further.
In a statement, IBEC, the business lobby group, called on the Government to resist calls for higher spending.
The Opposition parties said the figures highlighted Government mismanagement. They clearly show that the Government has sharply cut capital spending despite infrastructural shortages, according to the Fine Gael deputy leader, Mr Richard Bruton.
The deficit problems had been building for some time, Mr Bruton told The Irish Times, since the Government last year maintained control by transferring money from the Social Insurance Fund. "The absence of similar transfers this year gives a truer reflection of the state of the public finances. It is not sustainable to achieve budget targets by slamming the brakes on infrastructural spending and forcing up charges and indirect taxes."
The Labour Party's finance spokeswoman, Ms Joan Burton, said the figures were "an indictment" of "the financial incompetence" of the Minister for Finance, Mr McCreevy.
"And they tell a very different story from that being spun by the Taoiseach, Mr Ahern, and Tánaiste, Ms Harney, on the steps of Government Buildings on Tuesday. The Taoiseach may not be responsible for the economy of Japan, but Minister McCreevy is responsible for the Irish economy."