Ireland's exchequer recorded a rare surplus in January after the government sold of 1 billion euros ($1.4 billion) of debt in part state-owned Bank of Ireland, the country's finance ministry said on Monday. The sale of contingent capital notes at a slight premium last month together with increased tax revenues swung the government's finances into a surplus of 704 million euros from a deficit of 394 million a year earlier.
The surplus will only be temporary as Ireland forecast in December that its budget deficit would come in at 7.5 percent of gross domestic product (GDP) at the end of this year, still among the highest in Europe. Ireland is likely to better that target even when the one-off gain from the bank sale is excluded after robust tax returns last year helped push its deficit below 8 percent of GDP, comfortably beating the mark set under its EU/IMF bailout.
Those strong returns continued into 2013 after the tax take rose 3 percent year-on-year, partly as a result of December's sixth austerity budget in little over four years which introduced a package of 1.4 billion euros in tax hikes. The tax collected in January represents almost 10 percent of the 36 billion euros the government expects to collect this year and finance minister Michael Noonan said the amount taken in was a little better than had been expected. "While everything won't be sailing along in perfection in 2013, I think we'll look back on it as the year the economy turned," Noonan told the Newstalk radio station.
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