The Government's plans to set up a National Development Finance Agency have been strongly criticised by the Opposition and the Irish Business Employers' Confederation.
Last Friday, the Cabinet was warned that the European Union would count all of the new agency's planned €10 billion worth of borrowings as national debt in calculating the Government's economic performance.
During the election campaign, the Minister for Finance, Mr McCreevy, had repeatedly expressed confidence that the EU would not take half of the agency's debt into account.
The deputy leader of the Labour Party, Mr Brendan Howlin, said the news came "as no surprise in light of the implosion of Fianna Fáil's election commitments in recent weeks".
During the election campaign, Mr McCreevy had made great play of the agency and had cast aspersions on the Opposition's manifestos, he said.
"Now his own plans have been revealed as a house of cards", he added. "It would appear that the NDFA, the central plank of Fianna Fáil's election manifesto, is now in trouble and being downgraded by the very Government that championed it as a panacea to our ills," he added.
Fianna Fáil and the Progressive Democrats are now faced with a €2.6 billion "black hole" over the next two years, he said.
"The truth is that Fianna Fáil's manifesto is imploding. From the strength of the National Pension Reserve Fund to the public finances, the public have been sold a pup by Fianna Fáil," the Wexford TD declared.
Fine Gael's enterprise, trade and employment spokesman, Mr Phil Hogan, said that another of the Minister's "bright ideas" had been "thrown in the bin".
The bid to borrow money without affecting the Government's debt figures was nothing other than an attempt cover up their "abysmal record" on the public finances, he said.
"It has been exposed. It is an unjustifiable mechanism to give the impression that something was being done to fast-track infrastructural improvements," said the Carlow/Kilkenny TD.
The Green Party TD, Mr Dan Boyle, said that the NDFA had been "another one of McCreevy's gems of national creative accounting", heavily pushed by Fianna Fáil spin doctors during the general election.
Meanwhile, the Irish Business and Employers' Confederation has criticised the failure of the Department of Finance to consult with companies interested in public-private partnerships as it drafts the NDFA's legislation.
The heads of a Bill to set up the agency will be published by the middle of October. Until then, the Department is declining to hold talks with interested parties about the shape of the agency and its remit.
The director of IBEC's public-private partnership unit, Mr Reg McCabe, told The Irish Times: "They should be going into the pros and cons of this, and elaborate on the models that are used elsewhere."
In the UK, a company called Partnerships UK, in which the British government holds a 44 per cent stake, has been set up to funnel private money into the construction of public services.
Regarded as a private company, Partnerships UK's borrowings projects do not feature in the British exchequer's debt figure because they are not stateguaranteed. Under the Government's plan, the NDFA's debt would be State-guaranteed.