The International Monetary Fund has raised “serious questions” over the accuracy of the CSO’s 26% ‘leprechaun economics’ growth figures, and threatened to pull a report on the Irish economy because of them.
Such was the concern, the IMF was seeking a scrapping of the report and full reassessment of the Government’s figures and budget policy measures as a result.
Earlier this year, the Central Statistics Office published controversial figures suggesting economic growth in Ireland in 2015 grew by a staggering 26%.
But this figure was vastly distorted by unexpected corporation tax payments by 10 large multinational companies, and the CSO came in for strong criticism for publishing the number.
Documents released to the Irish Examiner under the Freedom of Information Act reveal the major concerns within the IMF which were relayed to senior officials within Michael Noonan’s Department of Finance.
“In a nutshell, there are some senior people within the IMF that are now seriously questioning the merit of our article IV [IMF update report on Ireland] going to the board,” Michael McGrath of the IMF told finance official John McCarthy.
“Instead, they are suggesting a full refresh of the forecasts and policy prescriptions to take account of the 2015 GDP figures,” Mr McGrath added.
Then he wrote in red for emphasis: “Zuzana Murgasova [the IMF mission chief to Ireland] would most likely be adding a recommendation to the report urging the Irish authorities to work on new statistical methods that would better serve Irish policy-making.”
The documents also show how the CSO and the Department of Finance have scrambled to establish a new working group — which will meet next month — to devise a new method of calculating economic growth.
A Department of Finance spokesman said the CSO applied the international rules and the numbers came out as they came out. If the IMF is doing something with their documents, that is a matter for the IMF, he said.
“For ourselves, the CSO applied the international standards as they need to and we have this new working group which will look at a more relevant measure of economic activity in Ireland.
“It was clear at the time that the headline figure came out as it did, the department does not base its policy on them. The data underlying the figures like unemployment numbers, debt levels, are what we rely upon to formulate policy. People are working on alternative measures,” he added.
The released documents show how CSO director general Padraig Dalton had to email his staff at the height of the controversy to reassure them that they were not wrong to publish the numbers.
“As both the Central Bank and economist Dan O’Brien have pointed out, the figures as compiled by the CSO are correct,” Mr Dalton told staff.
In an internal confidential note, sent from Mr Dalton to the country’s top three civil servants, it is claimed that the explanation given about the spike in numbers from the Government “looks plausible”.
The note, compiled by the CSO in conjunction with Eurostat, was given as a briefing memo for major bodies such as the European Central Bank and the OECD.
“It is clear the Irish authorities were well aware of the relevant recording rules [when they published the numbers],” the note stated.
On foot of the controversy, Eurostat decided to dispatch a mission to Ireland to verify the calculations, and Mr Noonan’s department agreed to “provide full access” to all documents.
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