Mr. Seamus McCarthy:

I thank the Chairman.

All revenues of the State are paid into the Central Fund of the Exchequer, unless otherwise determined by law. Most public services are funded by issues of money from that Central Fund, either through annual voted provisions or directly to pay for what are called Central Fund services.

The annual finance accounts present the receipts into and issues from the Central Fund, together with a set of statements and schedules that itemise the transactions. The format of the accounts is unusual, with a significant amount of explanation and information presented in footnotes to the schedules.

Chapter 1 of my report on the accounts of the public services is a recurring report, which is designed to summarise the transactions on the Central Fund in a more accessible format, and to highlight relevant trends over time.

Overall, the Central Fund receipts and issues in 2019 were close to balance.

Exchequer receipts in 2019 totalled €64.4 billion. Over 92% of this was accounted for by tax receipts. Payment of just under €2.4 billion by the Central Bank from its 2018 surplus income accounted for a further 3.7% of the receipts.

Issues from the Central Fund in 2019 amounted to €63.8 billion. Issues to fund voted expenditure accounted for €54.1 billion, or just under 85% of the total. Service of the national debt accounted for €5.2 billion, while Ireland's contribution to the European Union's budget accounted for €2.4 billion.

The finance accounts do not include any kind of balance sheet, or statement of the Exchequer's financial position at the year end. For this reason, the chapter on the Exchequer outturn tries to set out the summary position in relation to key assets and liabilities at the year end.

At the end of 2019, Ireland's gross national debt stood at €206.7 billion; this was up €1.5 billion from end 2018. However, the cost to the Exchequer of servicing the national debt continued to fall in 2019, reflecting the impact of the refinancing of debt by the National Treasury Management Agency in the prevailing low-interest market.

Liabilities under public private partnerships, PPPs, are regarded as "off balance sheet" from a general government perspective. Separately from the finance accounts, information published by the Department of Public Expenditure and Reform indicates that PPP-related commitments totalling an estimated €7.1 billion were outstanding at the end of 2019.

Finally, the value of cash and other financial assets held by the Exchequer stood at €18.5 billion at end 2019. This was up 5% on the 2018 year-end position, continuing the significant upward trend from end 2016.

Members of the committee will be familiar with the circumstances that gave rise to the Ireland Apple escrow fund account. In summary, following an investigation, the EU Commission ordered Ireland to recover alleged state aid, plus interest, related to the tax on profits reported by Apple for a ten-year period. The money in the escrow account is held under the terms of a formal agreement between the Minister for Finance and two companies in the Apple group, pending the outcome of legal proceedings. The use of the account allows the escrow parties to determine jointly how the fund is to be managed and invested, until the owner of the fund is determined. Any gains or losses in the interim will be incurred by the eventual owner. The parties have agreed to pursue a low-risk investment strategy for the fund.

Apple's lodgements to the account between May and September 2018 totalled €14.285 billion. By end 2019, the net assets of the fund had declined to €14.02 billion – a loss in value of €265 million. The largest part of the reduction in value related to a €209 million withdrawal from the fund in respect of what is referred to as a "third country adjustment". This related to payment by Apple of tax in another jurisdiction on the profits within the scope of the state aid decision.

The remainder of the loss in fund value was attributable to investment losses, administrative expenses and tax.

Separate from the administration expenses incurred by the fund account, State bodies have incurred significant costs in setting up the escrow account and in mounting legal challenges to the Commission's state aid determination. The 2019 appropriation account for the Vote 7 records gross expenditure of just over €60 million. This is divided between two expenditure programmes. These relate to the costs incurred in respect of economic and fiscal policy, on which the Department spent €47.5 million, and banking and financial services policy, on which the Department spent €12.6 million.

Expenditure under the economic and fiscal policy programme included a very substantial exceptional item. Note 6.3 on the account discloses that the Department reached settlements relating to protracted legal proceedings arising from an air travel tax introduced in budget 2009. Payments under the terms of the settlement totalled €24 million and were charged to subhead A4 for "consultancy services and other services". The payments were not provided for in the original Estimate, with the result that a Supplementary Estimate was required for the Vote in 2019. When this item is excluded, the programme expenditure in 2019 was only marginally up on the 2018 expenditure.

Members may also wish to note that the National Treasury Management Agency, NTMA, has provided a number of staff on loan to the Department to work in its banking unit. The related staff costs and certain consultancy costs are paid by the NTMA, and are not recouped from the Department. As a result, the reported expenditure on banking and financial services policy recorded in the appropriation account does not include the full costs of the functions undertaken.