Eurostat has sent a simple message to the Minister for Finance. The arbiter of what goes into the Budget mix - as far as Brussels in concerned - has made it clear that it has little time for clever accounting. The agency's decision to outlaw some €610 million in revenue that the Minister had counted on to balance his current Budget is essentially a technical ruling, but it is not without consequences.
From the perspective of the Budget announced by the Minister last December, it makes no difference. Mr McCreevy is still at liberty to spend the €610 million contribution from the Central Bank and include it in the Exchequer position at the end of the year.
But, when the Government's finances are viewed through the prism employed by Brussels, the Eurostat ruling has a significant impact. Mr McCreevy cannot use the €610 million when he calculates the General Government Balance (GGB). This is the measure used by Brussels to assess the true state of the Government finances and is increasingly being seen as the more important yardstick. Failure to keep the GGB at, or close to, balance would put Ireland in breach of the Growth and Stability Pact.
The Department of Finance said yesterday that even without the benefit of the Central Bank cash, the General Government Balance will be in surplus this year, but by less than the €873 million originally predicted. The real problem will come next year as the Minister will start with a much reduced surplus. It is hard to see how a significant GGB deficit - and the problems that go with it - can be avoided next year given the pressures on the Government finances.
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Yesterday's ruling from Eurostat presents another problem in this regard for the Minister. The agency has laid down a marker that any other imaginative proposals that the Minister might be mulling over to balance his Budget next year will be very carefully scrutinised. These include any further raids on the Central Bank coffers that the Minister may have in mind.
It also emerged yesterday that the Government has been somewhat economical with the truth about this whole business. The Department of Finance confirmed yesterday that it has known since the start of the year, that some €370 million of the €610 million Central Bank windfall would not be allowable as far as Brussels was concerned. Yesterday's ruling only relates to the balance of €240 million.
It turns out that this information was quietly factored into figures produced for the benefit of Brussels but not made public. The Department may claim that it could have been gleaned from a technical table published on its website, but this is little more than a fig leaf. It is astounding that an election debate was allowed to take place on the false assumption that this money counted for GGB purposes.
The Opposition is right to be angry. But drawing parallels between this omission and the sort of misleading statements that underlie the collapse of Enron and Worldcom is a step too far. Yet the net effect is the same; the credibility of the individuals and organisations involved is undermined.