Irish government finds extra £3.1bn in 'accounting error'
The responsibility for the error is between the country's National Treasury Management Agency and the Department of Finance, who are currently at odds against the origins of this rather colossal mistake.The extra £3.1bn will reduce the country's outstanding debt by 2.3% of the gross domestic product.
In the bad booksThe NTMA is responsible for local government housing and effectively 'lent' the £3.1bn to the Housing Finance Agency, but as a result of recent changes in government administration the double count was not picked up by the country's Department of Finance. The NTMA are flatly denying responsibility for the error, countering any suggestions of blame by pointing out that the Department of Finance are responsible for calculating the general Government debt. They have also suggested that the practice of double counting may have gone back as far as autumn 2010.
Double-edged swordThis must be a double-edged sword for Irish Finance Minister Michael Noonan. Whatever embarrassment he may be experiencing has to be countered with the massive relief a £3.1bn injection and subsequent 2.3% reduction in the country's debt brings as the economy still flatlines.
A credit bonanza and property boom built on shaky foundations saw the economy on the verge of implosion until late last year when the eurozone architects and IMF builders were called in for a fix up job that cost in the region of £77.2bn (€85bn). The resulting bailout pay off cuts are still taking effect and despite rumours that the country's December budget will feature cuts in the region of £3.1bn, as of this morning, Noonan is denying that the newly found funds will make a difference.
While this may be good news for the Irish government – and their bondholders – their eurozone partners still have bigger worries as France and Germany fight to save the Greek bailout plan and keep the Euro alive. This, coupled with emerging concerns over Italy's economy, is likely to revive the recent Tory tensions around our relationship with Europe.
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