Bond and tax data a welcome surprise for Government
The positive momentum in the economy received a double boost yesterday with huge demand for the Government’s 30-year bond and better-than-expected exchequer returns.
The NTMA raised €4bn through a 30-year bond at a reported yield of 2.088%, with demand in the region of €11.2bn.
The agency has so far raised €8bn, which means it is already more than halfway to meeting its €15bn target for the year.
The ECB’s €1.1tn quantitative easing programme has helped boost demand for eurozone bonds, cutting yields to record lows.
Ireland’s investment pitch has been enhanced by a growing domestic economy.
This was again underlined by exchequer returns for January, which show the deficit continues to narrow and tax receipts are improving.
The latest national accounts show a €781m surplus at the end of January compared with a €1.14bn deficit for January 2013. Stripped out the effects of the Single European Payments System last year, there was a €680m improvement over the 12-month period.
Tax receipts were up 12.3% to €4.19bn, with all tax categories performing well. Reflecting the growing employment figures, income tax receipts were up 4% to €1.5bn. Net voted expenditure was down 5% to €3.9bn.
“Underlying expenditure seems to be a bit more contained than we had feared after the loosening of the purse-strings that was evident in late 2014,” said Investec chief economist Philip O’Sullivan.
“While it’s still very early in the year, if the public finances keep this up then the risks to Ireland’s 2015 deficit target will be to the upside.”
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