The Minister for Finance, Mr McCreevy, has greeted the final Exchequer returns for last year as "encouraging" - and in many ways they are. For much of the year it appeared that a sizeable shortfall in taxation and rising spending would contribute to a sizeable deficit for the year.
However, the final Exchequer returns for the year showed a small surplus of €95 million. Using the EU measure for the State finances, a small deficit of 0.1 to 0.2 per cent of Gross Domestic Product is expected. In a Budget which involves €40 billion in spending and roughly the same amount in revenues, the best interpretation is that the Exchequer finances ended the year broadly in balance.
For a period during the year it appeared that the Budget targets were going seriously off course and that a worrying hole was appearing in tax receipts. A late surge in tax revenue and a sharp slowdown in spending - hopefully not caused by postponing spending until this year - have eased these concerns.
Tax receipts were still €1 billion below target, but this figure would have been worse had it not been for a late rise in income-tax receipts. Savings on spending and some additional non-tax receipts more than made up for the tax shortfall, leading to the small Exchequer surplus. Savings on the national debt and receipts from the sale of State assets also chipped in.
In a difficult year internationally, the Minister and his officials deserve credit for bringing the figures in broadly on Budget target. The fall in the debt to GDP ratio to 34 per cent - a low level by international standards - is also welcome.
That said, the underlying trend in the figures remains a concern, with spending rising 14 per cent last year and tax receipts up 5 per cent. The Minister, Mr McCreevy, has sought to correct this in his 2003 Budget package, which aims to slow sharply the rate of spending growth. Achieving this spending control while at the same time maintaining the required improvement in public services presents an enormous challenge to the administration.
Spending has soared in recent years - rising by around one third in the last two years alone - but public services do not appear to have improved commensurately. It will be all the more difficult to improve services with spending growth slowing sharply. An equally daunting challenge is evident in managing State investment spending, where ways must be found to plan, pay for and implement the significant improvements required in our creaking infrastructure.
Value for money in public spending is thus a central task facing the Government in 2003. This will require a tougher approach to deciding spending priorities than has been evident in recent years and a much clearer focus on implementing reforms which boost efficiency and improve services to the public. It is a complex and difficult challenge.