With just nine days to go to Budget 2003, it appears the Minister's main objectives this year will be to hold down borrowing and get the public finances back into a better state, writes Cliff Taylor,  Economics Editor

Holding down borrowing and setting the public finances back on a path to stability. This will be the central theme of the Budget to be delivered by the Minister for Finance, Mr McCreevy, in nine days' time.

Today, we begin a series examining the Minister's options which will run up to Budget day. As always, every sector will be on tenterhooks awaiting the Minister's words. However, this time around he has much less room for manoeuvre than in any budget of recent years.

This year, it is a question of choices. And all the indications are that the Minister's priority is holding down borrowing. In cash terms, he will have to borrow money to bridge the gap between Exchequer revenue and spending. This sum - the Exchequer borrowing requirement (EBR) in budgetary jargon - could be in the region of 2-2.5 per cent of gross national product (GNP).

However, the Minister will put much focus on another measure, known as general government borrowing (GGB). This is the measure used by Brussels to assess our financial position. It is lower than the EBR, mainly because it does not count the money given to the pension reserve fund and some other payments that leave the Exchequer but remain in the State sector. This is because it is aimed to be a measure of total borrowing by all arms of Government, rather than just by the Exchequer.

In a secret Government memo drawn up in July and inadvertently released to the Sunday Tribune, Mr McCreevy was aiming to keep the GGB to 0.25 per cent of GNP next year. Economic conditions have got worse in the meantime. However, the Minister reiterated again in the Dáil this week that the Government had a sovereign commitment under the EU Stability and Growth Pact to keep borrowing at or close to balance.

So he is likely to aim to keep a low GGB next year, probably between 0.5 and 1 per cent of GNP and possibly closer to 1 per cent given the pressure on spending.

This constrains his room for manoeuvre in framing the Budget package. Among the key issues will be:

Benchmarking: The public sector pay benchmarking report carries a substantial potential cost to the Exchequer. There will be a close focus on how the Minister deals with this.

Social inclusion: The Minister will increase spending to push up social welfare payments and target other measures at the less well-off.

Infrastructure: Some extra spending on roads is expected. The Minister may also indicate how future infrastructure investment can be funded, using borrowing and private sector funds.

Income tax: There will be no change in the 20 and 42 per cent rates. However, the leaked memo suggested that tax credits and bands would be increased in line with consumer price inflation - rather than wage inflation. This would mean some increase in the tax burden.

Employee's PRSI: There is speculation of a significant increase in the ceiling - currently €38,740 - which would expose higher earners to an increased bill.

Tax shelters and allowances: The Government is believed to be critically examining a range of these and restriction or abolition of some is expected.