FF: €3.6bn error may have cost state funds

THE Government was left red-faced yesterday after revealing its debt was actually €3.6 billion lower than thought after it uncovered an “accounting” blunder.

Opposition parties claimed the error could have hurt investments, saying foreign groups may have decided against injecting funds here because of the bigger debt.

It emerged the €3.6bn error occurred after a debt between two state agencies was counted twice.

But questions remain as to who was to blame and whether similar accounting mistakes remain as yet undiscovered.

The National Treasury Management Agency (NTMA) had originally borrowed the money from markets for the Housing Finance Agency.

But both bodies ended up recording the €3.6bn debt after a change in relationship between the two agencies.

Loans from the NTMA — the body that manages the nation’s debt — to the housing agency were counted twice, the Department of Finance said.

The department said the €3.6bn was lent by NTMA, which recorded it as money owed, while the housing agency — which finances house-buying for councils — also recorded it as a debt on its books.

However, the reduced debt is unlikely to see the Government shy away from further cuts and taxes in next month’s budget. The error relates only to general government debt, rather than the country’s debt.

The Central Statistics Office said the correct figure for Ireland’s general Government debt was now €144.4bn (92.6% of GDP) as opposed to the previously published €148bn.

“Overall, the state is no better or worse off as a result of the correction,” it said.

The NTMA said it flagged concerns about double-counting on a number of occasions to the department as early as autumn last year.

Fianna Fáil said the error may have cost the country funds.

“General government debt is the measure of the State’s total debt and is used for comparative purposes across the EU,” said finance spokesman Michael McGrath. “Therefore, potential investors examining Ireland’s public finances in recent months were basing any investment decisions on official figures which were significantly inaccurate.”

Sinn Féin said the error was “deeply embarrassing” for the Government.

Spokeswoman for expenditure Mary Lou McDonald added: “The idea that an ‘accounting error’ of this size went unnoticed for so long is truly amazing.”

The state’s finance watchdog committee, PAC, pledged to investigate.

“I will be seeking to commence an investigation into this immediately with a view to establishing who was responsible for the error and should be held to account,” said PAC chairman John McGuinness.