Mr. Seamus McCarthy:

I thank the Chairman. As members are aware, the NTMA is a complex organisation with multiple functions that extend beyond its original and core role in managing Ireland’s national debt. The structure of the NTMA, following a reorganisation in 2014, is outlined in the written submission. The sets of financial statements before the committee this morning reflect the various statutory obligations that the NTMA has in respect of its financial reporting.

The NTMA’s primary function is to manage borrowing on behalf of the State. The results of that borrowing activity are reported in the national debt account. At the end of 2017, the gross national debt stood at just under €199 billion, marginally lower than the debt at the end of 2016. Total debt servicing costs in 2017 amounted to €6.2 billion. This was 9% less than in the previous year, reflecting the impact of refinancing of debt at prevailing low interest rates.

Other important functions and services of the NTMA include: management of compensation claims on behalf of certain State authorities, in its capacity as the State Claims Agency; the management of the Ireland Strategic Investment Fund, ISIF; and the provision of procurement and financial advice in respect of certain public private partnerships and other large capital projects in its capacity as the National Development Finance Agency, NDFA.

In mid-2017, €3.45 billion was realised from the sale of almost 29% of the shares in AIB held by the ISIF. The proceeds from the sale were transferred from the fund to the Exchequer in the year. The value of the State’s remaining shareholding in AIB at end 2017 was estimated at €10.5 billion.

The NTMA assigns staff and provides certain other support services, on a reimbursement basis, to two independent bodies - the National Asset Management Agency, NAMA, and the Strategic Banking Corporation of Ireland, SBCI. These are governed by separate boards, and the NTMA is not accountable for their activities. The NTMA also provides staff on secondment for the Department of Finance’s banking unit, with the costs in that case being carried by the NTMA. The NTMA’s administration account shows gross expenditure on administration costs totalled €116.4 million in 2017, with 80% of the expenditure in respect of staff costs.

The audit report on the account draws attention to expenditure of €6.2 million in 2017 relating to contracts that were not publicly advertised. The NTMA’s statement on internal control provides explanations for the procurement approach adopted in relation to those contracts. The audit report also draws attention to non-effective expenditure of €853,000 relating to the planned development of a treasury management IT system. The project was terminated by the NTMA in 2017 without completion of the planned system.

Section 12 of the National Treasury Management Agency Act 1990 requires me to report annually to Dáil Éireann with respect to the correctness of the sums brought to account by the NTMA. This is in addition to the audit certificates that in produce on each set of financial statements. Chapter 23 before the committee today is the report in respect of 2016 and it highlights key developments in the year.

A similar report is being prepared for 2017 and will form part of the report on the accounts for the public services in 2017.