January 3, 2019 / 4:12 PM / a year ago

Irish budget returns to surplus a decade after crisis

DUBLIN (Reuters) - Ireland posted its first underlying budget surplus for a decade in 2018, a year ahead of government forecasts, as high windfall taxes and low interest payments ended a decade of deficits, Prime Minister Leo Varadkar said on Thursday.

FILE PHOTO: Ireland's Prime Minister (Taoiseach) and Defence Minister Leo Varadkar attends a news conference after a European Union leaders summit in Brussels, Belgium December 14, 2018. REUTERS/Piroschka Van De Wouw

Ireland’s deficit ballooned into double figures in 2009 when property prices collapsed, sparking a banking crisis and a three-year international bailout.

But the Irish economy posted the fastest growth in the European Union every year since 2014 and the country’s corporate tax take more than doubled since 2012.

The exchequer recorded a budget surplus of 106 million euros ($121 million) in 2018, and the government expects to run another in 2019, the finance ministry said.

The Irish exchequer posted a technical surplus of 1.9 billion euros in 2017 but once a 3.4 billion euro windfall from the sale of shares in Allied Irish Banks was excluded, it showed an underlying deficit.

The exchequer was 1.6 billion euros better off in 2018 than 2017, the finance ministry said.

“This is the first time in 10 years that we have recorded a budget surplus,” Varadkar said. “It means that we are very well prepared for a downturn or for an economic shock if that were to affect us.”

“We would expect to do the same in 2019 but its absolutely something we can’t take for granted or be complacent about,” he added.

Total budget expenditure in 2018 was about 250 million euros less than forecast, largely due to lower than planned interest payments on the country’s national debt, Varadkar said.

Meanwhile corporate tax receipts, much of which come from a small number of U.S. multinationals who book profits in Ireland, were 1.9 billion euros higher than expected, the finance ministry said.

Varadkar said, however, that Ireland was “not taking for granted” that corporate tax receipts would continue to exceed expectations.

“We are actually projecting a fall off in tax take from corporations. So if they pay the same amount in 2019 as they did in 2018 it will be a pleasant surprise,” he said.

Reporting by Conor Humphries, writing by William James; editing by Stephen Addison, Angus MacSwan and Kirsten Donovan

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