Ireland’s Deficit Illusion


From the Financial Times’ Alphaville blog:

“We’ll avoid the accounting implications of this deal, though we think it might be an interesting study,” we said last week of Ireland’s circuitous non-deferral deferral of a €3.06bn cash payment to a dead bank under the infamous promissory notes.


The “government” didn’t pay cash to Anglo – but Nama, the bad bank which is a Eurostat opinion away from being the government, effectively did.

According to the Irish exchequer statement for 31 January to 31 March 2012 [published yesterday], the government deficit plummeted to €4.26bn, from €7.066bn a year earlier. Not bad. Actually some key sources of tax revenue show marked improvement, such as VAT, capital gains and income tax. This is good news. But they’re not that good news for the headline fiscal deficit number we have.

The biggest “improvement” then is the “deferred” government payment to Anglo Irish, which isn’t really deferred but which has fallen out of the headlines because it’s come from Nama instead.

Now You See The Promissory Notes In The Deficit, Now You Don’t (Jospeh Coterill, Financial Times)

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