The Government has been criticised for their 'unrealistic' spending forecast for Budget 2024, by the Irish Fiscal Advisory Council (IFAC).
The budgetary watchdog said their projections going forward also "lack credibility".
It is part of their Fiscal Assesment Report for December 2023 which assesses the budget in terms of the broad fiscal stance, the economic and budgetary forecasts, and Ireland’s compliance with fiscal rules.
The report said: "The spending estimates omit large amounts of known spending this year. Overruns in health spending have been building throughout the year and were well known before budget day.
"By ignoring the overruns in 2023, the Budget 2024 projections are also likely to underestimate health spending in 2024.
"Furthermore, while some unallocated spending is provided for, the costs of the new public sector pay deal are unclear, and may exceed unallocated amounts, pushing spending higher again."
IFAC said transparency is lacking, especially around the measures introduced in Budget 2024 which were particularly poor.
"Overall, the separation of spending into core and non-core, elements has become unhelpful. The definitions of core and non-core spending, have become extremely blurred.
"A better approach would be to focus on general government spending, net of tax measures," IFAC said.
They said alternative estimates suggest that by 2026 spending could be €8.6 billion higher than Budget projections, with revenue €3.4 billion higher.
The general government balance would be €5.2 billion weaker.
The report said the Government’s budgetary forecasts underpinning Budget 2024 run only as far as 2026.
Fiscal framework
"This is too short term for the Council to provide a comprehensive assessment of the Government’s tax and spending plans over the, medium term. It runs contrary to previous commitments made by the Government, to plan further ahead.
"More generally, it demonstrates weak medium-term budgeting and further underscores the need to strengthen the fiscal framework," the report said.
They said a major concern is that the forecast horizon ends right before some of the major budgetary challenges facing Ireland begin to bite.
The costs associated with an ageing population and the transition to a lower carbon economy will begin to build quickly as this decade closes.
Budget 2024 forecasts for 2023 look to be inadequate, with the basis for the forecasts being unrealistic.
Spending for 2023 looks set to be higher than Budget 2024 forecasts imply.
Spending forecasts do not account sufficiently for the overruns in spending which are apparent in the Department of Health and the Department of Children.
The overruns in health appears to be due to increased demand arising from demographics.
As a result, overruns in health spending should result in higher core spending in 2023 and this higher spending would be likely to recur into 2024.
Since Budget 2024, a supplementary estimate of €960 million has been approved by Government for the Department of Health.
However, the HSE’s overspend in 2023 is likely to be higher than this, with the HSE likely to use cash reserves and accruals to fund spending this year.
Cost-of-living spending measures announced in Budget 2024 cost €1.7 billion in, 2023.
This is in addition to what Budget 2024 describes as non-core spending of, €5.2 billion. Overall, there is spending of at least €6.9 billion in addition to core spending for 2023.
