Exchequer figures for 2007 show a massive downturn in finances with a deficit of €1.619 billion compared with a €2.265 billion surplus for 2006.
Tanaiste and Minister for Finance Brian Cowen had originally projected a €546 million deficit for 2007 at the time of his Budget in 2006 but revised that figure in the last Budget.
"The 2007 outturn for the exchequer balance is in line with that envisaged when framing my 2008 budget some weeks ago," Mr Cowen said in a statement.
In his fourth and toughest budget, Mr Cowen announced in December an overhaul of property tax and targeted extra welfare spending to take the sting out of a projected fall in Irish growth to its lowest level since the early 1990s.
The Department of Finance said tax revenues in 2007 came in €1.82 billion "below profile" at €47.25 billion. It was still 3.8 percent up year-on-year. Income tax came in on target, but stamp duty on houses as well as excise duty and value added taxes were behind expectations, the Department said.
Total receipts last year reached €47.9 billion, up from €46.1 billion in 2006.
Mr Cowen said the year-on-year increase in tax revenue was below earlier expectations for 2007, "mainly due to developments in the property market".
He also reiterated the fact that while additional borrowing had to be undertaken in 2007, the overall debt position is sound, saying: "the nation's debt now represents about 25 per cent of our income compared to approximately 65 per cent ten years ago. This is one of the lowest in the euro area."
The Tanaiste last month forecast economic growth of just 3.0 percent in 2008, down from 3.25 percent seen in October. The rate is healthy by the standards of the rest of the euro zone but only half the pace in Ireland two years ago.