The public finances slipped into the red last month but tax revenue continued to surge, new figures have shown.

The Exchequer was in deficit by €1.2 billion at the end of April, having moved from a surplus of €880 million in March.

A deficit of €1.3 billion was recorded at the same stage of last year.

The April move out of surplus came as Government departments stepped up their capital spending after three months of tightly guarding their purse strings.

Even with this acceleration in expenditure, however, the Government had still spent €421 million less at the end of April than the Department of Finance had expected for this stage in the year.

On the other side of the Exchequer picture meanwhile, tax receipts continue to run well ahead of Department of Finance forecasts.

In all, the Exchequer took in €288 million more than had been anticipated over the first four months of the year.

VAT and stamp duty receipts were again the main contributors to the excess, reflecting continued buoyancy in consumer spending and in the property market. VAT receipts alone were €157 million higher than projected levels.

Most sources of income outpaced expectations last month, with income tax coming in more or less on target.

Revenues as a whole were up by 11 per cent on the same stage of 2004 at slightly more than €11 billion.

The Departments of Education and Social and Family Affairs were among those responsible for the €421 million Exchequer underspend over the first four months.

Economists acknowledged last night that the Exchequer finances were in sound condition, predicting that they would comfortably overshoot Department of Finance expectations.

Alan McQuaid at Bloxham Stockbrokers believes the State will be able to borrow more than €1 billion less this year than it had originally planned. He acknowledged, however, that the repayment of monies to long-term residential care patients could skew this somewhat.