Government spending is set to rise by 9.9 per cent this year compared to 1998, according to the latest figures from the Department of Finance.

The big rise in day-to-day spending means the Minister for Finance has officially breached his own 4 per cent spending limit for the first time since he took office.

His definition of net current spending has now risen by 4.1 per cent a year on average between 1997 and 1999, the method which Mr McCreevy chose to measure his spending.

The Minister said he was satisfied that this was close enough to the limit to "confirm the Government's resolve to maintain firm control over current public expenditure over the lifetime of the Government".

The 9.9 per cent increase in spending in 1999 is boosted by large once-off payments to local authorities, without which the rise would be 8 per cent compared to last year, a Department spokeswoman confirmed.

The bulk of the extra current, or day-to-day, spending announced by the Department yesterday is made up of £20 million (€25.39 million) to assist farmers affected by the fodder crisis. But the actual amount over budget was just £12 million because of savings made on social welfare, as more people than the Government had predicted signed off the live register.

Overall day-to-day spending in 1999 is now forecast at £12 billion (€15.27 billion). The figures are contained in the 1999 Revised Estimates for Public Services, which are to be submitted to the Dail for approval.

The Minister also announced an additional sum on capital expenditure, which is generally used for long-term projects such as road and railway development.

The rapid increases in this type of spending have been welcomed as a means to ensure that the economy can keep growing without running into significant infrastructural bottlenecks such as permanently congested roads or second-rate telephony services.

However, in this instance, the extra capital spending has been used to cover the cost of loans to fishermen, which have been written off as bad debts. The sum involved is £12.3 million (€15.61 million), but because Bord Iascaigh Mhara will ultimately be required to repay the Exchequer, the advance will have a neutral budgetary effect, the Minister said. The fees and expenses relating to the sale of Telecom Eireann also make up a part of the increased expenditure.

The rate of increase in capital spending in 1999 compared to 1998 has fallen back. At the time of the Budget, the Minister announced a 30 per cent increase in capital spending in 1999. However, the Government spent more than he had predicted in 1998 and this rate of increase has now fallen back to 28 per cent.

According to the Minister, this will "underpin continued investment in key infrastructural developments which are essential to allow the economy to grow and prosper".