Friday 24 November 2017

So what happened?

Emmet Oliver

Q: How could the Government lose track of €3.6bn? That's as big as the entire budget changes that are expected in December.

A: The €3.6bn was money borrowed to help fund local-authority housing. The problem was that the NTMA, which looks after the national debt, and another agency called the Housing Finance Agency both put the same loan in their books and nobody in the Department of Finance spotted the duplication until now.

Q: But don't all these agencies and departments talk to each other?

A: It appears not. The Department of Finance acts as the final port of call for how much the State is actually borrowing. It received accounts from the NTMA and the Housing Finance Agency but it didn't spot the overlap in these two separate sets of accounts.

Q; But why would it miss a sum as large as that?

A: For years the accounts of the Housing Finance Agency had been very simple. It borrowed money in its own right and simply told the Department of Finance how much it had borrowed -- this was then added to the national debt. But things changed last year when the NTMA started borrowing on behalf of the housing agency.

As a result there was a need for someone to make sure the €3.6bn was recorded either on the NTMA's books or on the Housing Finance Agency's books, but not both.

Q: But €3.6bn is such a large amount of money, surely an oversight like that would have been spotted quickly?

A: No, the NTMA warned of the dangers last year and has issued several warnings to the Department about it, but clearly no change was made until now. The CSO is another body which appears to have been confused by the whole thing, only spotting the error recently when the NTMA brought it to its attention.

Q: Is anyone going to take the blame for this and who is responsible?

A: While it is a deeply embarrassing situation for the Department of Finance, the department -- as is customary practice -- was yesterday not prepared to say which officials were involved. It said the problem was brought to its attention in recent days by the NTMA as it firmed up debt figures for this year.

Q: But are we better off as a result? Is it like having your mortgage reduced?

A: Yes, we are technically better off. We now owe €144.4bn, compared to the €148bn we thought we owed before the mistake was uncovered. But it does not change the fact that we are still spending far more than we're collecting in tax. It is this that Michael Noonan will be tackling in December.

Irish Independent

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