THE DEPARTMENT OF FINANCE insists that exchequer returns are stabilising and “broadly on target”, despite a shortfall in income tax.

New exchequer figures released by the department show the deficit hit €12.1bn by the end of August.

The government is predicting a tax intake of €31bn for the year, down 6% on last year. Tax taken to the end of August are 0.7% off target, or €141m.

Income tax came in at €6.6bn, which is  €270m below target.

The other three main tax groups are beat expectations for the eight months of 2010.

Total spending of €29bn was 6% lower than last year, but the government will have to push hard if it is to close the gap between its income and its spending.

Speaking on the Six One News just moments ago, Minister Brian Lenihan said: “The financial administration of this country is on target.”

He said that while unemployment is a problem, “the fact remains that if we don’t have financial stability, we won’t have growth.”

“Irish growth is on the way. It is slow, it is sluggish, I accept that, but it is on the way.”

The minsiter said that the early tentative signs of growth are there.

Earlier, the IMF said that Ireland was unlikely to default on its debt, but remained in a weak position to face any further financial difficulties.