The public finances are continuing to move in the right direction, Minister for Finance Michael Noonan has said.

“In fact, I am pleased to state significant progress has been made in this regard,’’ he added.

He told the Dail the underlying deficit of 1.3 per cent recorded last year was further evidence the public finances were being placed on a sustainable footing.

"Encouragingly, Ireland has successfully exited the excessive deficit procedure in a timely and durable manner,'' he added.

Speaking during a debate on the summer economic statement, the Minister said from this year Irish public finances would be subject to the rules of the preventative arms of the stability and growth pact.

Our new fiscal objective was to achieve a structural deficit of 0.5 per cent of GDP, and this medium-term objective would be achieved by 2018, he added.

Under the new regime, he said, increases in public expenditure would be sustainably financed and safeguarded from dependence on cyclical revenues.

“These rules are designed to ensure that fiscal policy enhances economic growth and macroeconomic stability,’’ said Mr Noonan.

“This is something that should be welcomed.’’

He said he was greatly encouraged by the latest exchequer returns, which provided a real-time indication of the pertaining budgetary position.

After the past five months, tax revenues were three-quarters of a billion euro, or 4.3 per cent, above expectations, representing an annual increase of nine per cent, or just over €1.5 billion, when compared to the same period last year, he said.

Mr Noonan added the revised projection was for an additional €900 million, which equated to an increase of around two per cent when compared to the budget 2016 forecast.