State gains €3.6bn from 'error'

 

The general Government debt is to be written down by 2.3 per cent, or €3.6 billion, following the detection of an accounting error.

The Department of Finance, responding to a TV3 report, said the National Treasury Management Agency (NTMA) had notified it of a double count which was responsible for the difference.

Fianna Fáil has called on Minister for Finance Michael Noonan to provide a clear explanation of how an error of such scale could occur.

A department spokesman said the error was brought about by a change in the relationship between the NTMA and the Housing Finance Authority. The NTMA previously acted as an agent for the Housing Finance Agency, the liabilities of which are included in general Government debt, but now the NTMA loans directly to it.

The loans appeared in the NTMA accounts for 2010 as assets and again as liabilities in the Housing Finance Authority accounts. The Housing Finance Agency provides loan finance to local authorities and voluntary housing bodies for housing and related purposes.

The general Government debt is projected to increase by €25 billion to €173 billion in 2011.

"Removing the impact of this double count reduces the estimate of 2010 general government debt by €3.6 billion or 2.3 per cent of GDP," the department spokesman said.

Fianna Fáil finance spokesman Michael McGrath said Mr Noonan should appear before the Oireachtas finance committee to explain the matter.

He said potential investors examining Ireland’s public finances in recent months would have been basing their decisions on "official figures that were significantly inaccurate".

"This is a very serious error on the part of the Department of Finance which raises a number of questions that need to be answered," Mr McGrath said.

"When did the Department of Finance realise this mistake had been made? How could such a serious mistake be made in relation to a measure as sensitive as general government debt? When did the NTMA notify the department of the possibility of double counting arising from the change in the NTMA’s dealings with the Housing Finance Agency?"