* Budget deficit 10.6 bln euros in Jan-May vs 3.6 bln yr ago
* Tax revenue on target, decline seen bottoming out -finmin
(Adds analyst comment)
By Andras Gergely
DUBLIN, June 3 (Reuters) - Ireland's budget deficit almost tripled in the first five months of 2009 from a year ago but tax revenue has started to come in on target and its rate of decline has flattened out, the finance ministry said on Wednesday.
Ireland is planning to borrow 25 billion euros ($35.7 billion) this year to help plug the proportionally biggest deficit in the euro zone and it will likely look for lenders for another 4 billion to pour into nationalised Anglo Irish Bank. [ID:nL21025958]
Ireland posted a budget deficit of 10.6 billion euros for the January-May period, compared with a shortfall of 3.6 billion a year ago, Wednesday's exchequer data showed.
Ireland collected 13.5 billion euros in taxes in January-May, which was down from 17.1 billion a year ago, but showing a clear improvement in the overall trend, Finance Minister Brian Lenihan said.
"Stabilising the exchequer finances is essential for our overall economic recovery," Lenihan said. "We are now starting to see the benefits of this approach."
After two emergency budgets since October, the government now looked on track to meet its latest target of a 2009 budget deficit of 10.75 percent of gross domestic product, said Alan McQuaid, chief economist at brokerage Bloxham.
"The latest exchequer returns continue to paint a bleak picture of the country's public finances," McQuaid said. "However, on the plus side there appears to be a stabilisation in the rate of decline.
Much of the improvement came from increases in tax rates introduced in April's emergency budget, analysts said.
"On a like-for-like basis, however, these figures do not suggest as yet that conditions are improving in the Irish economy, the pace of decline has merely stabilised," business group IBEC said.
The Irish government faces a drubbing in Friday's elections for local councils, European Parliament and two Irish parliamentary seats, on a day when data is expected to show more than 400,000 people claiming unemployment benefit. [ID:nL2446020]
"Such a total is unlikely to do the government any favours just as the electorate are casting their votes," Bloxham's McQuaid said.
(Additional reporting by Padraic Halpin; Editing by Ron Askew)