32 thoughts on “Ireland: Fiscal Transparency Assessment”

  1. From the report

    Ireland’s published fiscal forecasts cover a relatively short time horizon and provide limited information about the long-term sustainability of fiscal policy.
    The 2013 budget documentation only provided forecasts of the main fiscal aggregates to 2015. The 2012 SPU document provides a summary of the EC’s 2009 Aging Report’s longterm demographic and spending projections for Ireland out to 2060 which were jointly developed between the EC and Member States. The government has not published a set of long-term projections since the 2007 National Pensions Framework. In addition, the 2013 Expenditure Report includes an analytical chapter on the impact of alternative demographic scenarios on education expenditure between 2013 and 2030. However, in both cases, the analysis is limited to the expenditure side of the budget, and does not assess the implications of these trends for government revenue, balance, or debt. While the DoF has a longer-term forecasting model which it uses to provide inputs into the EC’s fiscal sustainability reports, it does not publish its own comprehensive long-term fiscal projections.

    5 years into the crisis and DoF still doesn’t produce a fiscal sustainability analysis?

  2. @Frank

    5 years in and we really don’t know the state of the place..
    ““The government prepares two sets of annual accounts which are audited and published within nine months of year-end, but neither provides a comprehensive overview of the central government finances or follows international accounting standards though they do conform with domestic legal requirements. ”

    We don’t follow international standards and no “comprehensive overview” of government finances.

    Hope the bond guys don’t read this….@96 pages it’s a bit tiresome.

  3. While the International Monetary Fund says that “Ireland is approaching best practice in fiscal reporting and forecasting,” the content makes clear that the accounting systems currently in place are closer to the times of Queen Victoria than the computer age.

    At the MacGill Summer School in July 2009, Enda Kenny, then leader of the Opposition, asked why do we have a budgetary system in place that is unfit to run a corner-shop, let alone a nation of 4 million people?

    Why?

    Today if Taoiseach Enda Kenny requests data on the total public spending on legal services in 2012, wonder how long it would take to provide an estimate? Ditto for information technology and so on.
    Weeks at least if Freedom of Information requests are a guide.

    Usually, information is released before all central government departments respond. Some ignore internal requests for data.

    Kenny could not be given accurate information in a reasonable time span as there is no common chart of accounts!! This is old-fashioned shoe-box accounting of the corner shop.

    While it’s bad enough that there is little public transparency, ministers are often as ignorant.

    The IMF says that the government “prepares two sets of annual accounts which are audited and published within nine months of year-end, but neither provides a comprehensive overview of the central government finances or follows international accounting standards though they do conform with domestic legal requirements.

    Ireland’s consolidated government balance sheet data currently excludes the €116.8bn (73.5% of GDP) in fixed assets of central and local governments, the €116bn (73.0% of GDP) in liabilities associated with public service pensions, €4.0bn (2.5% of GDP) in liabilities under PPPs, and the €324.7bn (204.3% of GDP) in assets and liabilities held by public corporations

    Monthly Exchequer returns only include part of revenues and spending; the charts of accounts for central government departments, extra-budgetary funds and other non-market agencies, local governments, and public corporations are not able to automatically generate summary fiscal data in line with international reporting standards; there is no permanent official or unit in the Irish administration responsible for setting and enforcing financial reporting standards across the public sector. As a result, there is no uniform set of accounting rule and procedures applying to government departments, extra-budgetary funds, semi-state bodies, local governments, and public corporations.

    “This makes consolidating government-wide financial information and promoting system-wide improvements in financial reporting practices very costly and time consuming.”

    Indeed and this is of course boring to many but it’s the plumbing of a banjaxed system.

  4. The trouble with addressing the sustainability of the public finances is that the short conclusion would be that they are unsustainable; with unfortunate political consequences for those currently, or in the future, in power.

    http://www.independent.ie/business/irish/bailout-exit-talks-put-off-until-final-troika-visit-29425721.html

    Viviane Reding, the coulourful member of the Commission from Luxembourg, who often seems to have her finger on the pulse, suggests that the days of the IMF in the troika are, in any case, numbered.

    http://www.sueddeutsche.de/politik/eu-kommission-reding-will-iwf-aus-der-troika-werfen-1.1723352

  5. @DOCM
    +1

    Wolfgang’s dream..
    “At the same time, it also weakens his position in European policy, his favorite subject. Schäuble believes that the currency crisis presents an opportunity for Europe’s political union. He envisions this looking like the Atomium, the massive molecule-shaped structure in Brussels: A core group of countries consisting of Germany, France and other countries join together to form a new commonwealth with its own parliament and a democratically elected government, while the remaining nations form a group orbiting the core, each positioned at varying distances from it. This is what Schäuble had already envisioned in the 1990s, and he still wants it today.”

    http://www.spiegel.de/international/germany/wolfgang-schaeuble-and-the-lonely-battle-to-reform-europe-a-911076.html

  6. @ Flj

    There is a valedictory undertone to the Spiegel article. The relationship between Merkel and Scaheuble is best summed up IMHO in the well-known phrase; “Keep your friends close and your enemies closer”; Sun-tzu. Chinese general & military strategist (~400 BC).

    A spokeswoman for Schaeuble has dismissed the views of Reding as has Asmussen. That they felt the need to do so is the main point of interest.

    Trying to dine at the European menu a la carte is a continuing characteristic of all European politicians. (The exercise in this regard in the UK has parted all company with reality).

    Either all stick to the menu or no one will!

    http://www.welt.de/wirtschaft/article118139496/EU-erlaubt-Frankreich-den-Mercedes-Boykott.html

  7. O troika, o troika please stay with us. The only hope of bringing our political system, public finances and fiscal reporting up to any sort of standard is by outside pressure.
    Its amazing to see how our ministers and senior public servants jump to troika commands!
    We need more of this for many years to come.

  8. @Thomas Paine

    Its amazing to see how our ministers and senior public servants jump to troika commands!

    Please, please, please tell me you are taking the Michael Noonan? Please?

    The Internet is already at 100% of “unintended irony” carrying capacity and someone who calls themselves “Thomas Paine” advocating the benefits of foreign autocratic rule might cause it to break.

  9. @Fiatluxjnr

    That’s some dreadful editing (or rather no editing at all) by RTE.

    1. No source for figures.
    2. No context
    3. No clarification of basis on which GDP is measured
    4. No indication as to implications for full year outcomes.

    Your licence fee at work!

  10. @ Shay Begorrah
    Toushay!
    However our version of democracy so far has not protected Irish citizens from a ruinous system of government. One could argue that we have voluntarily and democratically entered the arrangement with the troika rather than face even tougher conditions requiring massive structural changes if we tried to go it alone?

  11. @ Fiat & Frank
    It’ seems pretty bad to me.
    Surely this is unsustainable. It’s as if we have achieved nothing meaningful over the past 5 years.
    I hope I’m wrong but the hard bit of cutting expenditure is still to come

  12. It looks grim …from link provided by Michael Hennigan…

    “Ireland’s General Government Gross Debt (GGDebt) stood at €204.1 billion or 125.1% of annualised GDP at the end of Q1 2013, an increase of €11.6 billon since the previous quarter when GGDebt amounted to €192.5 billion representing 117.4% of GDP (Table 2).”

    The question must be …is this sustainable?

    How can they continue the hype in the face of obviously contradictory figures?

  13. The Troika issued a short statement
    http://www.imf.org/external/np/sec/pr/2013/pr13267.htm

    I suppose after the performance in Greece anything is to be expected. Seems rte are out in full force today on bailout exits. Not much about the 204,000,000,000 we owe. Corrigan on six one now saying we are going to borrow another 6,000,000,000 before the end of the year from the troika.
    We are not entirely masters of our own destiny, according to corrigan, citing risks from other eu states.
    So it will be 210 billion by the end of the year.

  14. @ Flj

    A State’s finances is evidently not a matter of simple arithmetic!

    @ All

    A really impressive overview of the current situation confronting what might best be described as the “Western” democracies.

    http://www.ft.com/intl/cms/s/0/f3f20034-efa7-11e2-a237-00144feabdc0.html#axzz2ZNXgUqwJ

    Notably;

    “As Mr Schäuble’s comments in Athens made clear, Berlin’s 21st century conception of hegemony is about forging a set of rules and then insisting that everyone sticks to them. Discretionary power – the essence of Hitler’s rule – is thus to be kept to a minimum. A community of norms will bind Europeans together.”

    The trouble is that Berlin is not currently abiding by the existing EU rules and wishes to invent its own e.g. the perennial legal questioning of the rules in question, not to mention the assorted bilateral deals being struck with less fortunate brethren, in the case of Greece €100 million in the form of a bilateral loan.

    The UK a lost cause?

  15. For those of us who consistently stated that we were going nowhere fast we will be vindicated – not if but when now.
    Sad thing – nothing to gloat about.

  16. @DOCM
    National debt…..according to NTMA
    “Ireland’s national debt rose by €18.5 billion in 2012 to a record €137.6 billion, according to figures published yesterday by the National Treasury Management Agency (NTMA).” per IT today.

    National debt according to CSO..
    ““Ireland’s General Government Gross Debt (GGDebt) stood at €204.1 billion or 125.1% of annualised GDP at the end of Q1 2013, an increase of €11.6 billon since the previous quarter when GGDebt amounted to €192.5 billion representing 117.4% of GDP (Table 2).”

    Shure you can do anything with statistics..
    According to NTMA it’s “directed investment” in the banks of 20+ billion returned 10% last year and is allegedly worth 8.6b now. Work that magic out!

  17. http://www.cso.ie/en/releasesandpublications/er/gfsq/governmentfinancestatisticsquarter12013/?utm_source=twitterfeed&utm_medium=twitter#.UeksxW0bhi4

    Amazing that we broke the significant 120% Debt to GDP without so much as whimper from the press. Apparently our GGGD now stands at 125%.

    However fear not because the markets have realised that we are a great bet now and our borrowing rates are declining due to our excellent performance on reducing debt.

  18. @ Eamonn

    debt/GDP is that high in part due to our massive pre-funding via both market and Troika. We have €25bn or so of cash on hand.

  19. Kenny’s statement that the upcoming budget will be “the last difficult budget” would benefit from clarification. Kenny is resigning ?. Angela phoned him and informed him that it was a mistake for Ireland to accept responsibility for the banks and their bond holders and after the German election she would make public her intention to collectivise past and present bank debt. Kenny is engaging in cute hoor politics. In the absence of evidence to the contrary I will go with the latter.

    31 local enterprise offices to be opened up to work with start-ups and micro-businesses. Layer on more ineffective bureaucracy.

    Does he see 137% debt to GDP?.

  20. @ Mickey
    He uses the word if and hopefully a lot. He knows it won’t be – has to soften the blow a little for people.
    There are a lot of dodgy headwinds:
    1: Intels results very disappointing today. It’s next big investment will be in Israel
    2: Pharma jobs will be lost due to generics
    3: OECD will influence further investment decisions via a vis tax
    4: Debt to GDP climbing
    5: Loan interest rates for SMEs here too high compared to Germany

    All in all many many problems ahead. Not all of our own making. No easy answers.

  21. @Eureka
    I do not disagree with you.

    Knowing the micromanaged, back handed nature of Irish politics it rankles that they still stick to the tried and failed.

    No national government should be handholding, babysitting, micromanaging SME. They should be putting in place the rules and regulations under which the banks and SMEs operate. Instead of pumping up the bureaucracy in terms of employee count and cost they should be diverting those funds to banks to disburse as an interest rate deduction to SMEs’.

    The head waiter and the waiter model of Dail has failed miserably. I know that by subsidising through the banks the TDs’ would lose influence and campaign contributions, but, C’est la vie.

  22. It seems like these figures re debt and GDP won’t be discussed.
    It would also be interesting to run comparisons with Detroit. I know there are glaring differences but at what point did their debt become unsustainable. I’m not talking about the figure at bankruptcy but what was the point of no return? Was it the growing deficit with the loss of industry? Was it paying for their boom in terms of pensions? Could we end up with something similar (I personally remain optimistic about our ability to survive simply because it doesn’t take much to support 4 million people) but debt is debt – you either pay it back or go bankrupt. Would be nice to think about these things

  23. @ Eureka

    well, money is fungible, so it can be used for anything – future redemptions, future deficits, or just as an emergency backstop for anything.

    Using current assumptions (that we retain market access), the 26bn in cash on hand at end June, plus another few billion due in from the Troika between now and December, is to be used for a combination of (roughly):

    1. 2014 redemption 7.5bn
    2. remaing 2013 and all of 2014 deficits 13bn
    3. Buffer for emergencies 10bn (this will be run down bit by bit though, as the economy/financial markets normalises)

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