Debt sell-off gives boost to PSBR

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HIGHER revenues from income tax and excise duties gave public sector finances an unexpected boost last month, while a successful pounds 1.3bn sale of privatised company debt yesterday suggested the Government should easily meet the Treasury forecast of a pounds 36bn borrowing requirement for the 1993/94 financial year.

The public sector borrowing requirement was pounds 2.9bn in June, compared with City expectations of about pounds 3.7bn.

Privatisation receipts were pounds 200m. They have brought in pounds 600m so far this financial year and are expected to reach a total of pounds 5.5bn.

This total will include contributions from the sale of debt in privatised companies. An auction yesterday raised pounds 1.3bn, with BT, National Power, Scottish Hydro, London Electricity, Seeboard and Manweb redeeming some of their own debt with a face value of pounds 0.8bn. In all except one case, the company bids beat bids from previously shortlisted lead managers in the City.

Repurchases of debt by Eastern Electricity in April and the National Grid earlier this month raised pounds 488m.

There could be another sale later in the year. The Treasury holds debt with a face value of pounds 2.447bn issued by privatised utilities.

The Government's tax receipts were 4.5 per cent higher in April- June than a year earlier. Income taxes and Customs and Excise duties showed the biggest increases. The Treasury said early payments of tax by the self-employed could have affected the June figure.

For the first three months of the financial year, government borrowing was pounds 11.4bn, compared with pounds 13.4bn in the same period last year.

City analysts said it was too early to discern a firm trend, and the financial markets would be much more interested in any signals that emerged from the annual public spending round now beginning.

Simon Briscoe, an economist at SG Warburg, said: 'The figures were good, even though they are erratic from month to month. The Treasury will probably keep a bit more good news up its sleeve for later in the year.'

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