Showing posts with label Capital spending in Ireland. Show all posts
Showing posts with label Capital spending in Ireland. Show all posts

Tuesday, September 4, 2012

4/9/2012: Six Key Facts About Irish Government Spending: August 2012


In the previous post I looked at the receipts side of the Exchequer returns for January-August 2012. Now, let's take a quick tour through the expenditure side.

In January-August 2012, the Government total Net Voted Expenditure stood at €29,593 million or €244 million (0.8%) above the same period of 2011. In other words, the Government is spending more in 2012 than it spent in 2011 on the expenditure side that it actually controls. In July 2012, the overrun was €138 million or 0.5%.
Fact 1: things are getting worse month on month, not better, on the spending side
Fact 2: things are getting worse year on year, not better, on the spending side

Current Net Voted Expenditure rose €444 million (+1.8%) y/y in January-July 2012 compared to same period of 2011. In August, this figure went up to €659 million (+2.4%).
Fact 3: the core driver for rising Government spending is Current Expenditure, and the increases in spending in this area are getting worse, not better, with time. 

On the total expenditure side, the Government is now exceeding its target for 2012 (these are revised targets published in May, so the overruns are compared for just 4 months running) by 1.1%, and on current expenditure side these overruns are at 1.6%. In July 2012 the same figures were +0.8% and +1.3% respectively.
Fact 4: even by revised targets the Government is already behind its set objectives, just 4 months into running and the set-back is accelerating month to month.

In July 2012, five departments exceeded their targets on current expenditure side, including (as expected) Health (+1.0%) and Social Protection (+4.4%). In August 2012, six departments were in breach of their targets on current spending, with Health performance deteriorating (+1.5%) while Social Protection performance showing shallower miss on target (+4.2%).
Fact 5: More departments are slipping into underperformance relative to target in August than in July.

In August, five departments posted increases y/y in Current Net Voted Expenditure, in July there were seven departments in the same position.
Fact 6: year on year cuts in spending in smaller departments are not sufficient to offset increases in spending in larger departments. 

Capital expenditure has fallen €415 million (down 20.9%) y/y and is now €120 million (7.1%) below the target. In an ironic twist, these 'savings' will be totally undone through the Government capital expenditure boost once privatization process gets underway. 

However, annual estimates assume 13.4% or €562 million reduction in capital spending. With 74% of thse already delivered on, it is hard to see how the Government can extract more savings from this side of the balancesheet to plug the widening gap on the current expenditure side.

To summarise, therefore, the Irish Government continues to increase, not decrease the overall Exchequer expenditure year on year and is now behind its own targets. 

Neither the receipts side of the fiscal equation, nor the expenditure side are holding.