Minister Michael McGrath updates Cabinet on impact of Covid-19 on Government finances

Minister Michael McGrath updates Cabinet on impact of Covid-19 on Government finances

The Minister for Public Expenditure and Reform, Michael McGrath has confirmed that €12 billion more was spent in the Department of Social Protection in the 12 months to end-March 2021 than over the previous 12 months. photo:Gareth Chaney/Collins.

The Minister for Public Expenditure and Reform, Michael McGrath has confirmed that €12 billion more was spent in the Department of Social Protection in the 12 months to end-March 2021 than over the previous 12 months.

The TD for Cork South Central gave a detailed update to Cabinet on the end of March expenditure position, including an update on expenditure performance of Departments against profile and a year-on-year comparison and a briefing on the expenditure outlook for the months ahead.

Overall gross voted expenditure by Departments to the end of March 2021 was €19.5 billion. This was €511 million (2.7%) ahead of profile and €2,469 million (14.5%) higher than expenditure for the same period in 2020.

Gross voted current expenditure of €18.6 billion was €631 million or 3.5% ahead of profile and €2,733 million (17.3%) ahead of last year. This reflects the continued significant expenditure on Covid-19 schemes in the Department of Social Protection such as the Pandemic Unemployment Payment (PUP) and Employment Wage Subsidy Scheme (EWSS).

In relation to capital expenditure, restrictions on construction activity as a result of Covid-19 will have impacted on infrastructure delivery and related spend and this has resulted in gross voted expenditure being €120 million or 11.3% below profile and €264 million (21.9%) below the same period last year.

Minister McGrath said that he is determined to “push forward on capital plans” and that completing the review of the National Development Plan in the coming months will be a key priority.

Capital investment will help our economy to rebound from the damage of Covid-19. At a new all-time high of €10.8 billion in 2021, investment in infrastructure will provide stimulus and employment at this important juncture of our economic recovery.

“The aggregate expenditure to the end of March this year on the EWSS and PUP was nearly €3 billion. In total, €12 billion more was spent in the Department of Social Protection in the twelve months to end-March 2021 than over the previous 12 months, reflecting the combined supports to business and incomes of the TWSS, EWSS and PUP.

“Careful management of public expenditure will help to steer the economy out of this difficult period, and I want to reassure people once again that there will be no cliff edge to these supports.

“In the coming weeks, the government will make and announce decisions about the future of the economic supports for the period post-end-June. We anticipate a healthy rebound to economic activity in parallel with the gradual reopening of society,” he said.

Meanwhile, the Central Statistics Office (CSO) published its Government Finance Statistics - April 2021 Results – Annual Results.

The publication highlighted the significant impact of Covid-19 on Government finances in 2020.

There was a general government deficit for 2020 of €18.4 billion, following a surplus in 2019 of €1.8 billion and an increase in general government borrowing of almost €14 billion.

At the end of 2020, government revenues were €3.5 billion lower than 2019.

Statistician Tom Fitzgerald said that the effect of Covid-19 on Government finances is reflected in both the drop in government revenues (-3.9%) and the increase in government expenditures (+19.1%).

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