The impact of COVID-19 crisis on public finances was highlighted for the first time by the 2020 Q1 Exchequer Returns, published on Thursday 2 April 2020. Speaking at a press conference yesterday, Minister Paschal Donohoe predicted that tax revenues will decline steeply over the coming months and expenditure will rise, with the Government putting in place significant resources to help fight the spread of COVID-19.

The resulting large fiscal deficit is expected to be somewhat cushioned by the economy’s position of relative strength – a budget surplus, cash reserves and significant progress in lowering the national debt.

The Government will also be making these income supports available to a larger number of people on the live register in receipt of payments. This was confirmed by the Central Statistics Office (CSO) on 2 April 2020 to be over 500,000. Minister Donohoe expects these income supports will ‘cushion the economic shock’.

In his address, the Minister stressed that the steep fall in economic activity is not due to imbalances such as credit growth; but is a casualty of the COVID-19 outbreak. He also added that the Government is working to ensure that there will be minimum reduction to productive capacity, so that firms and workers can resume economic activity as soon as possible.

Key points:

• An Exchequer deficit of €2,535 million was recorded to end-March 2020. This compares to a deficit of €966 million in Q1 2019.
• Reported tax income was under €13 billion in Quarter 1 2020.
• Spending was €1.1 billion ahead of predictions – related to health and social protection
• Exchequer deficit of €2.5 billion reported in 2020, compared to surplus of €1.6 billion in 2019