The Irish economy will be in the black this year for the first time in almost 30 years. Buoyant Exchequer funds will suffice to meet day-to-day spending without borrowing. The Department of Finance has conceded that despite rising expenditure, the Exchequer's finances will show a small surplus at year's end.
The forecast was underpinned by official Exchequer returns published yesterday which showed tax receipts rose by £1 billion more than the Department estimated in 1997.
Confirmation of the continuing economic prosperity came as nearly £1.5 billion was added to the value of the Irish stock market as heavy trading in the major financial shares drove it up more than 3 per cent to another new high.
And Government bond prices also soared to record levels as bond prices in the United States and Europe rose rapidly.
The surge was triggered by a flood of money moving out of the unstable Far Eastern markets into what are perceived as more secure investments in North America and Europe.
In the meantime, the pound came under renewed selling pressure, sending the Irish currency lower against sterling, the deutschmark and the dollar, and fuelling concerns of further losses - and knock-on effects on inflation - in coming days. Dealers suggested that up to £100 million of the Irish currency was sold yesterday.
The renewed speculation is largely based on the market view that the Government will not revalue the pound in the run-up to monetary union.
The Central Bank's view of revaluation may be clearer today when it publishes its annual monetary policy statement.
Yesterday's official Exchequer returns for 1997 point to the economy growing even faster than many had predicted in the final three months of the year.
In addition, borrowing in 1997 will be £43 million less than the Minister for Finance, Mr McCreevy, forecast when he presented his Budget last month and that is a a full £402 million less than the official Budget target at the beginning of the year.
When the less stringent EU method of calculation is applied, the figures are even better -
putting the general government surplus at almost 1 per cent in 1997. This is by far the best position compared to Ireland's European partners ahead of entering the single currency.
Tax revenues surged across almost all headings last year. Income tax receipts were £24 million higher than Mr McCreevy believed at the beginning of December. However, it was VAT which caused the real surprise - generating £54 million more than predicted.
The Department is not yet sure of the reason for this huge upsurge but it points to significant consumer spending in September and October.
But in a continuation of tradition, spending also ran well ahead of target. Net current expenditure was up almost 9 per cent from an official prediction of 6.6 per.
This was the result of public sector pay increases, particularly to paramedics, hospital consultants and clerical workers. Garda and prison officer overtime came in at £32 million extra.
There was also significant extra spending on health, particularly on hepatitis C and on education, mostly due to technical factors.
Mr McCreevy also spent £186 million extra on the An Post and Telecom pension funds, and made payments to An Post's savings schemes.
Buoyant growth in run-up to Christmas: page 14