Michael Noonan (Limerick City, Fine Gael)

I thank Deputy McGrath for raising this serious and important issue. I will give the Deputy the information I have to hand, but if it needs to be supplemented later, I will provide additional information.

My Department has informed me that the general Government debt figure reported to EUROSTAT at the end of September last for the period up to the end of 2010 overstated the actual debt figure as a result of a double count. The reported figure for the end of 2010 was €148 billion, which overstated the amount by €3.6 billion. From the immediate review of the records to hand, it is the case that the matter was signalled at a technical level to the Department by the NTMA last year. At this stage it is too early to be definite as to what action was taken, but it would seem that the significance of the matter was not appreciated at that time. I understand that "last year" refers to August 2010.

In the context of the current work under way for the publication of the forecasts later this week, the information was again raised by the NTMA at an official level with my Department. Following examination of the issue by my officials, together with the Central Statistics Office and the NTMA, and after establishing that a double count had occurred, I was informed of the issue yesterday and briefed in detail on it. The CSO has already informed EUROSTAT about the double count and the information has also been communicated to the European Union and the IMF. The record shows the NTMA contacted the Department twice, one contact last August which was not acted on and one while we were preparing the figures for the coming Friday's publication, which has been acted on. The NTMA may also have made verbal contact, but I do not know that. The record shows the number of contacts to be two.

The double count in our debt figures arose because in 2010 the Housing Finance Agency, HFA, borrowed directly from the NTMA instead of from the open market. General Government debt is compiled by adding the central Government debt borrowed by the NTMA to debt sourced on the open market by other Government bodies. However, when the HFA borrowed from the NTMA, the €3.6 billion in question was already in the central Government debt figure. As the liabilities of the HFA were then added to arrive at the general Government debt figure, the €3.6 billion was counted twice.

Before turning to how this could have happened, I want to address the issue of what the revision means in terms of the Irish economy and public finances. First of all, our debt to GDP ratio for the end of 2010 is now 92.6% of GDP, not the 94.9% previously published. The reduction to the base at the end of 2010 due to this correction has been improved by 2.3% of GDP. This means that our projected peak level of general Government debt will be lower than previously forecast. The details will be made clear in the medium-term fiscal statement that will be published this Friday. However, this revision did not change the net debt position for 2010 - the general Government debt less liquid assets and cash - and does not have any effect on the general Government deficit for 2010 or for this year. In overall terms, Ireland is no better or worse off and the target deficit consolidation for 2012 and future years, to which we are fully committed, has not changed. Suppose, for example, a person got an incorrect statement from his bank which understated his current account by €500. The correction of the error in the statement would not make the person any better off. He would still have the €500 in his account - no more and no less. That is the situation. The total debt is being reduced, but this has no effect on the budgetary position whatsoever.

The questions to be addressed now are whether the mistake could have been prevented and what should be done to ensure that such errors do not happen in the future. This is a serious issue and I am determined that the necessary lessons are learned and immediately acted upon. It is clear there has been a systems failure. The Secretary General of the Department of Finance has already asked for a full report on the matter and will arrange for an external review of the systems in the Department, the NTMA and the CSO to be carried out in order that I have the necessary information to be satisfied that any systems errors have been addressed. Once I have the full facts of the matter, we will be better placed to establish the processes and systems we need to implement to ensure the data supplied by the State are robust and beyond doubt.

That is my information to date. If further information comes to me, I will communicate it to the Deputy and the House.

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