New figures from the Department of Finance show that the public finances continue to be strong in 2006 with exchequer returns showing a surplus of €1.3 billion in January.

This compares with a €419 million surplus in the same month last year.

Tax revenues continued to soar, rising to €4.2 billion in line with target forecasts. This shows that tax revenues last month were 22 per cent ahead of the same period last year.

The Department of Finance has forecast a 6 per cent rise in tax receipts in 2006 compared with an overall increase of 10.3 per cent in 2005. Voted expenditure was unchanged on January 2005 at €2.9 billion.

Commenting on the figures, Goodbody Stockbroker economist, Philip O'Sullivan, said that while it would not be appropriate to read too much into just one month, it was clear that the accelerating momentum seen at the end of last year had continued into 2006.

Mr O'Sullivan said it was likely that tax revenues would continue to benefit from continued buoyancy in the labour market, despite the impact of changes to tax credits and bands announced in the Budget.

Employment is set to break the two million barrier for the first time in the history of the State, while labour earnings continue to increase.

"While we await official statistics about the performance of retail sales in December, anecdotal evidence suggest that retailers had a bumper Christmas season," Mr O'Sullivan said.

Mr Alan McQuaid, economist at Bloxhams, said the Department's tax forecasts for this year could turn out to be conservative and that the Exchequer deficit for 2006 would be lower than projected.

"On the basis of the performance of the public finances in the past couple of years and the impressive start to this year, the odds suggest that the deficit at the end of 2006 will be a lot lower than projected."