Full-Year Exchequer Statement

December 2013 Exchequer Statement

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32 replies on “Full-Year Exchequer Statement”

Mixed bag.

Ok, under Tax Revenue, Euro 1.16bn, positively and primarily driven by income tax, VAT and excise duty, and also by property tax.

Non-Tax Revenue decreased by Euro 144m, but that would have been decreased further by Euro 153m if further dividends of that amount had not been extracted from the semi-state sector. Excluding this additional dividend extraction, overall tax and non-tax revenue would have increased by Euro 864m…..

However, “not negative”‘ which is good……but hardly game-changing.

On the Capital Receipts end, the figures are flattered by once off sales of Irish Life and the Govt’s BOI CoCos. Non-recurring.

Under Voted Dept Expenditure, noteworthy is the increased expenditure of Euro 87m on Agriculture, Fisheries and Food…presumably Agriculture in the main. Very noteworthy is the Euro 130m in Education and Skills’ expenditure……the Euro 67m reduction in expenditure in Jobs, Enterprise and Innovation…..while Health expenditure continues to increase (+27.4m).

The increase in tax income is then more than wiped out by the Euro 1.65bn increase in interest service on the national debt.

I had to laugh when I saw the Euro 333m increase in Ireland’s contribution to the EU budget….!

What does the Euro 1.035bn in payments under the Credit Institutions (financial Support) Act repent…? Anyway, that and the increased interest on national debt make up the Euro 3bn increase in Non-Voted Current Expenditure…..recurring and increasing at an alarming rate, largely offsetting the savings under Voted Dept Expenditure (reduction in services) and increased capital receipts.

Finally, the decrease in Non-Voted Capital Expenditure of Euro 1.56bn is largely driven by another once off…..sale of Irish Life shares.

In conclusion, disappointing and worrying. Tax take increase wiped out by the increase in interest on National Debt, while the other “savings” were largely driven by once off items……little real improvement in other expenditure headings if one strips out the once-offs.

Finally, under sources and uses, it is clear that Ireland’s debt service is proceeding….draining any savings that are made.

Sorry, “Very noteworthy is the Euro 130m decrease in Education and Skills’s expenditure.”

Anyway, when you add it altogether with the contingent liability (OBS Ireland) picture, and the CBI posting earlier by Frank G (reduction in lending continues to reduce across the spectrum, mixed story on deposits (more short term)’ etc), it’s hardly a pretty picture. In fact, it’s a precarious picture. The modest increase in taxes being more than wiped out by increased debt service is hardly a “corner turned” story…..


Yet it appears that income tax, VAT and excise duty are in fact behind target……So one-off “fillers” appears to be the primary, but unreported story, as is the offsetting increase in the national debt interest rate bill.

Very little to show for all the “burning” of services. If growth doesn’t happen (to allow revenues to outstrip the likes of increased interest rate cost), the IMF’s stressed Debt /GDP scenarios will begin to play out….with the public debt ratio reaching 130% +….not even to mention the private debt ratio.

Not too many once-off tricks left in the bag….as John McKand the FC alluded to last year, the built in safety margin buffers have likely been eroded at this point, so there is now little room for manoeuvre,

Again, could someone please explain to me what the Euro 1.035bn in (increased) payments under the Credit Institutions (Financial Support) Act represent? Am I right in saying above that this is recurring? Thanks.

Too much time on my hands here tonight….-18 Celsius outside at present and my car is in a snow drift 1/4 mile from the house. Need to get it towed out. As I wait for roadside assistance…..

Looks as if the NTMA are lining up to get long term money in….just in case…! Real sign that they are worried. No relying on the Euro 25bn stockpile anymore.


They are probably right to try to get ahead of this….kick the can as far as possible down the road and hope something will turn up continues to be the current strategy. JG?

Not a great strategy given that demand, lending, etc.continues to contract in Europe. Need to develop a strategy other than waiting for growth /the tooth fairy…real reform, etc. Should have begun it long before now.

Ireland is in a bit of a snow drift as well. I see from the IT that there “may be scope for tax cuts given that some deficit targets have been exceeded”.


Steve Collins et al. “What Crisis?”

@Paul W

Ta for that. “What Crisis?” What is ‘real reform’? From whose perspective? In whose interests?


“In a time of universal deceit telling the truth is a revolutionary act” [G. Orwell]

[…] can’t handle the truth. Truth is as dead as the sovereign. Odious interest payments heading for 33.33333% of tax revenue. What crisis? Where is the Hibernian Spartacus – or are we all to be crucified on the Appian Strasse?


To borrow Mario Draghi’s phrase as he dished out a Trillion to the financial system …

cf “The Roight People” and link the dot balls in the upper_echelon network! And think back to September 2008 and the … er … “advisors” to the FF/PD/gp admin. What are pals for? Lovely morning here – loads of untaxed fresh air.


Pls get me out of here.

The margin between Spanish/Italian bonds and the 10-year bund is below 2%.

The WSJ says Erik Weisman, who helps manage $3.5 billion at MFS Investment Management Inc. in Boston, said he is “reassessing” his fund’s holdings of Spanish, Italian and Irish debt after all three markets rose toward the end of 2013.

“You have to ask: Has Europe figured it all out? Clearly they have not,” he said.

BlackRock says it’s still keen on peripheral debt.

On other news The New York Times today repeats the dubious claim of 4,500 IT vacancies in Ireland. Link here among related issues:

Jobs in Ireland’s foreign-owned sector in 2013 below level in 2000

@David O’Donnell

re: Indo link


“The list of names included a series of property syndicates which included judges, barristers, solicitors, surgeons and other professionals.

Several members of staff from Arthur Cox — the magic-circle law firm that advised the State and key agencies on the bank guarantee, the nationalisation of Anglo and recapitalisations and restructuring plans — were classified as HPPs by Anglo.”

Well, who would have guessed that now!

Welcome to the HPP world of Anglo/IBRC

HPP means ‘High Profile Person’, not Highly Protected Person’

re: Ir Times tax cuts:

Has the Ir Times headline writer lost his/her marbles or is the IT in need of more sales.
Still, if you buy a commercial property, you can ‘dispose’ of it after seven years with no capital Gains Tax!
So if you are a HPP and have 10 or 20 million to spare, or a friendly bank manager, why not have a punt!

@ Paul W,

The €1.035 billion payment under the CIFS Act are monies paid out under the Eligible Liabilities Guarantee on the liquidation of the IBRC. Debts in the IBRC that were covered by the ELG were paid out immediately. The scheme then became an unsecured creditor of the IBRC in their stead.

If there is a surplus after the sale of IBRC assets and transfer of the residual to NAMA this will be divided pro rata between all the unsecured creditors including the tiny few remaining unsecured seniors who took a hit. It might be better if the NAMA transfer resulted in no surplus. The ELG would get back nothing but neither would any of the other unsecured creditors. In any event any surplus is likely to be relatively small – or should be.

@ David O’Donnell/ Joseph Ryan

The apparent acceptance of the inevitability of tax cuts before getting the finances in balance and naiveté that income taxes would be engineered to benefit just the coping classes shows that there is scope for more electioneering in the lead up to 2016.

Enda Kenny…indicated in recent weeks the tax burden on hard-pressed middle income earners will be eased in the next budget if the public finances permit.

As for the HPPs and Leona Helmsley’s little people, remember when Minister Richard Bruton said that his pension and that of bankers based on bubble inflated earnings, were a property right protected by the Constitution, while agreeing to a €2bn raid on private pension funds?

@ Joesph Ryan,

Your comment re Tax cuts…. Irish Times etc.

The 7 year CGT exemption for domestic property is an attempt to reinflate the property market a touch.

But severe taxation of rental income remains… and interestingly enough our “Super Junior Minister Jan O’Sullivan” is now flying the suggestion that rental income be subject to a cap, or linked to an inflation index.

I don’t think the idea will gain traction… but now that it is out there I am sure it will be raised time and time again. Labour will go with any populist ideology to get their vote up.

What the dept of Finance give with one hand, they will take back with the other…. in my opinion despite Property prices now at good value… I still see property as very very risky investment option.

Looks like we as a country are financially threading water and just keeping our head up. The safe shore is still a good distance away. The reported carry on in Limerick and Anglo/IBRC makes one sick.

Is there anything out there that isn’t risky? The days of easy gains are over.
I think property is going to take a hammering eveywhere when rates go up.

Real reform…must deal with the current account deficit more quickly, plus the contingent liabilities. But who will pay for that you ask? Only Irish sources (beyond borrowed money) are deposits and private pension funds. Large deposits sound like targets but the obvious problems arise. Private pension fun could be accessed more but one then has to provide a fair universal solution to those losing, which would also require a deletion of Unfunded /current account dependent PS pensions. Immediate cropping of larger PS pensions funds too.

However, that is still not likely to be enough. Some form of debt restructure is required. Easier to do within a Troika program I would say (where term and interest rates can be manipulated).

Truth though is that there is no easy road. However the protecting of the elites in Ireland is becoming /is blatantly unfair.

No matter how one approaches it, all will need to take a lesser standard of living (and that includes through to welfare). The current propping up of lifestyles based on borrowing needs to be culled……note the first reaction of the Irish Govt to the less than rosy is to try to raise 10 yr money based on current positive investor sentiment towards Ireland. That may be part of the mix, but surely cannot continue to be core strategy. Protected interests must be tackled…..otherwise, it will be large increases in taxes and ultimately another program where Ireland will be forced to make changes. The Arthur Cox and Anglo inner debtor circle is enough to make one despair……it’s a hotbed of corruption /potential corruption…..Unfortunately, there is no political leadership in Ireland to follow such a course. Most of the senior politicians are old farts looking to feather their nests before they retire.

These figures plus recent contingent liability discussions clearly demonstrate how precarious the situation is. If Ireland keeps going like this, the axe will be swung. Francis has previously said that Germany will not allow Ireland to fall. That may be so but Germans will not allow the Irish to continue with inflated salaries, pensions, benefits, etc……all while having substantial deposit and pension fund resources capable of being tapped.

@ Seamus
Thanks for the explanation. So a one off write off called by something else. More write-offs are required, obviously. They couldn’t fudge this one when they decided that liquidation was the only way to go.

Just in case anyone was under any illusions that the government’s claims about needing to cut €300 billion from the PS pay bill were lies: we “needed” to cut that amount not to reduce the deficit but so that Fine Gael and Labour would have something to buy the next election with.

Any guesses as to what form the “tax cut” will take? My guess: a drop in the higher headline rate. People only understand (to the extent that they understand at all) drops in the tax rates. And dropping the higher rate will give the money to those who deserve it least. Therefore, that is what the government will do. QED.

One more thing re the 1.035bn CIfS payments – why is it shown under current expenditure when in fact it is a capital write off?
Seems like more accounting fudge…..
However, if dealt with in a capital account (write down of capital), what account would that be.

Obviously, treating as expenditure allows for accrual /kicking the can.

I note too that the health of the property tax figure is largely down to prepayment of 2014 household liabilities….another hole for 2014.

The Irish have always been great creative accountants!

Tut tut Seamus! ‘In an era of universal deceit telling the truth is a revolutionary act’ [G. Orwell] ‘Spose me post is in the post?

@Joseph, DoD, Mods

Maybe the blog should tag for future reference, without comment perhaps, the Indo report linked above.

The bits that might be noted include those below.

In the context of no proper account of the decision to bail out Anglo etc and make the Irish state liable for senior credits in guarantee interests at play, some subltle and some not so subtle, and theconnections to whether directly :

“The list of names included a series of property syndicates which included judges, barristers, solicitors, surgeons and other professionals.

Several members of staff from Arthur Cox — the magic-circle law firm that advised the State and key agencies on the bank guarantee, the nationalisation of Anglo and recapitalisations and restructuring plans — were classified as HPPs by Anglo.

Arthur Cox was appointed by the Fianna Fail-led government to advise on the banking crisis, without a competitive tender, in late 2008.

Other solicitor/borrowers were placed on the HPP list because they acted for the bank in some legal proceedings as well as borrowing from it.

A separate review of politically sensitive investors was also carried out by Anglo.

Investors, many of whom had borrowed from the bank in order to invest in Anglo-promoted products, had investments valued at more than €250m according to the investor review.

Investors who may have lost out when the bank was nationalised included members of the judiciary, journalists, entertainers and several pension schemes. Anglo staff also lost out.”

“The details of some — but not all — high-profile borrowers were given to the State, but only if the borrower’s exposure had a significant public-interest dimension in terms of litigation or reputational issues that may have affected the bank or the State.

This included the State’s handling of so-called legacy-debt issues arising from the bank bailout.”

That mangled 3rd sentence above was in mid re-hash when the gremlin snatched the post.


“In the context of no proper account of the decision to bail out Anglo etc and make the Irish state liable for senior credits in the banks – nor of the interests at play, some subtle and some not so subtle, nor of those interests connections to those who influenced or made the decision, whether directly or indirectly – paragraphs 2, 3, 4 and 7 of the Indo extract might be read more than once.”

@ Paul W,

IBRC had some recently issued bonds and maybe some deposits that were covered by the ELG scheme. On liquidation these were immediately paid the money due to them by the Exchequer, hence the non-voted current expenditure item in the Exchequer Account. The cash was paid out to the covered creditors of the IBRC. The Minister for Finance takes their place as a creditor of the IBRC but joins the queue with the other unguaranteed unsecured creditors that were left at the time of the liquidation. Maybe there will be some surplus left for the unsecured creditors but hopefully not too much.

@ seafoid,

In the day’s of the noughties… banks stress tested for 2 or 2.5% above the ECB rate. Mortgages were given out like confetti, oh and if you required extra for a car loan and a kitchen upgrade or a holiday… no problem.

Now we have most Irish banks at 4 to 4.5% above the ECB rate… and as you say things are going to get very very interesting (painful) when the ECB starts to raise rates from 0.5% to say 2.5%.

And yes you are correct there are risks in most financial ventures, even in cash savings!! However the political pogrom populist risk is still very much there… I would caution about underestimating it especially with property as it is so illiquid.

I look back in amazement at how the cost of living has changed so much in Ireland, property tax, Dirt tax, USC, levies, water charges, cutbacks, austerity, internal deflation and so on and on… and all brought in with not much more than a whimper from the population. Why even eugenics could be on the table next.


Do not concern yourself with a mangled sentence. The State itself has been mangled behind a green coloured curtain screen.

Today’s Ir Ind article are about as depressing as it can get. But lets look at the bright side.
We will be rewarding the HPPs with some tax cuts before long.
Perhaps no state or country can survive without blue blood, even if the blood is dyed at great expense.

Thanks Seamus
If I understand correctly, there is therefore no write-off per se. The Minister becomes an unsecured creditor in place of the guaranteed creditors and presumably doesn’t recognize the loss in accounting terms…..So, back to BS (if there is in fact little to recover).

Actually, the overall financial picture here is awful, worse than I thought. Beats me why any investor would be long Irish bonds. I understand the short term mtm advantage for some trading them (on an EU proxy supported basis)…but on credit fundamentals, it looks crap and still heading in the wrong direction.

I thought the Indo headline was going to refer to a moral condemnation of the Anglo list by the religious orders. How naive of me.

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