The Minister for Finance, Michael McGrath TD, has welcomed data published by the Central Statistics Office (CSO) which shows a General Government Surplus of €8.3 billion last year, the equivalent of 2.9 percent of GNI*. This compares with an €8.6 billion (3.2 percent of GNI*) surplus in 2022. A record level of corporation tax receipts in 2023, just under €24 billion, is a key part of the surplus.
Previously large budgetary deficits were recorded in 2020 and 2021 as the Government provided support to households and firms during the pandemic.
Commenting on the figures, the Minister for Finance, Michael McGrath T.D. said:
“I welcome today’s figures which show the Irish government achieved a significant budgetary surplus in 2023 for the second year in a row. This result is testament to the careful management of our public finances in recent years and gives us options that are not open to many peer countries in the developed world.
It is also noteworthy that General Government Debt fell in 2023 compared to the previous year. Next week, Minister Donohoe and I will publish the Stability Programme Update (SPU) which will again project that our public finances will remain in healthy positive territory this year and in the coming years.
However, it is important not to lose sight of the fact that at least part of the surplus is due to the strength of corporation tax receipts, some of which is likely to prove windfall in nature. While our headline position is strong, this can change quickly given the inherent volatility in our corporation tax receipts and the dependence we have on revenues from a small number of multinational companies.
In this context, it is imperative that transitory revenue streams are not used to finance permanent increases in expenditure or reductions in taxation. With this in mind, Government recently published legislation providing for the establishment of the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. The Bill has now passed second stage in the Dáil and will proceed to committee stage shortly.
The Future Ireland Fund will help deal with future expenditure pressures including ageing, climate, digitalisation and other fiscal and economic challenges. This is not a rainy day fund because these are costs we know are coming our way. If we don’t make provision for them now, future governments will face very difficult choices in the years to come to ensure revenues match the expenditure commitments of an ageing population. The purpose of the Future Ireland Fund is to support State expenditure from 2041 onwards in a consistent and sustainable manner.
The Infrastructure, Climate and Nature Fund will seek to deal with the historic pro-cyclicality of public spending and to assist with climate change objectives and nature, water quality and biodiversity issues. I want to ensure that no future government ever has to slash investment in critical infrastructure in areas such as housing, transport, health, education and energy, when we encounter an economic downturn or shock. The ‘stop, start’ approach to public capital investment must be consigned to history.
These two new long-term funds will make the future safer for our economy, our public finances and our people. My aim is to have the legislation enacted before the summer recess and have the Funds in place later this year.
I now look forward to the publication of the SPU next week, the National Economic Dialogue next month, and the publication of the Summer Economic Statement before the summer recess, as we work towards Budget 2025 next October.”
*Gross National Income (GNI) is an indicator designed specifically to measure the size of the Irish economy by excluding Globalisation effects.
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