The latest exchequer returns show the Government’s budget deficit – the difference between what it spends and what it takes in in taxes – rose to €9.45 billion in August.
This compares to a deficit of just €625 million this time last year, marking a year-on-year deterioration of €8.8 billion.
The deficit was driven by a big increase in Government spending, which was €43.2 billion for the period, up 28 per cent, or €9.4 billion, on last year.
“The rise in expenditure primarily reflects increased departmental drawdown in response to the Covid-19 pandemic,” said the Department of Finance, pointing particularly to health and social protection.
Income tax, the Government’s biggest tax head, has proved remarkably resilient in the face of the crisis, generating €13.9 billion, which was only marginally (1.4 per cent) down on last year.
Commenting on the figures, the Minister for Finance Paschal Donohoe said: “Today’s Exchequer returns confirm the scale of the cost of fighting this pandemic. The Exchequer deficit to end-August reflects the unprecedented increase in public expenditure as a result of the Government’s support for our health service and the wider economy through this crisis.
“Although there are some positive developments – most notably in income tax receipts – a considerable and unprecedented amount of uncertainty remains. A deficit of this magnitude underlines the extent of the challenge we face — once the economy recovers — in placing the public finances on a sustainable trajectory,” he said.