State coffers ended January €1.7 billion in the black, according to figures released yesterday.

The Exchequer returns for the first month of 2007 show that the surplus at the end of January was €1.69 billion, compared with €1.3 billion a year earlier.

The figures show that the Government took €5.34 billion in revenues during the month, as against €4.54 billion in January 2006.

Government spending reached €3.65 billion last month, compared with €3.24 billion in January 2006.

During the month, the State collected €4.74 billion in tax, well ahead of the €4.23 billion it received a year ago.

Of this, VAT accounted for over €2 billion, while income tax brought in over €1 billion.

Bloxham stockbrokers economist Alan McQuaid said that tax receipts were running €55 million ahead of expectations. "On the basis of the performance of the public finances in the past few years, the odds suggest that the actual Exchequer outcome at the end of 2007 will once again be significantly better than projected by the Department of Finance . . . and even at this early stage we are forecasting a positive budget balance of between €1 billion and €2 billion," he said.

The accounts also show that a near €600 million contribution classed as "other capital receipts" was largely accounted for by a loan repayment of €574 million from FEOGA, the EU agricultural finance body.

This body reimburses member-states for spending on EU measures to support the common agricultural policy (CAP) and rural development.

During January Government departments spent €3.5 billion, €650 million more than the €2.85 billion they spent during the same period in 2006.

Robbie Kelleher, of Davy Stockbrokers, noted that Government spending ran €67 million over budget during the month.

"Once again, the major outperformers were capital gains and stamp duties, but corporation tax and VAT were also well ahead. The big shortfall was in income tax, which was 1 per cent lower than last year and € 166m behind target. We suspect that this mainly reflects timing factors rather than any underlying deterioration in trend."