The Minister for Finance, Mr McCreevy, will learn in the autumn if he can ease budgetary pressures by tapping into Central Bank reserves worth €1.8 billion. Una McCaffrey reports.
The Bank is reviewing the adequacy of its reserves against guidelines set by the European Central Bank (ECB).
This review will be completed over the next few months, it confirmed yesterday.
If the Bank decides that it holds more money than it needs, the surplus would be certain to come to the attention of Mr McCreevy, who could ask for the funds to be transferred to the Exchequer in time for December's Budget.
Such a transfer would reduce the amount that the State has to borrow to meet ongoing spending commitments, such as capital investment, the Special Savings Incentive Scheme and the National Pension Reserve Fund.
Mr McCreevy said on budget day last year that he would borrow €1,869 million this year, but deficit projections have since risen to reflect an expanding hole in taxation revenues.
At the start of this month, the Department of Finance estimated that tax revenue for the year would be €500 million below target, implying that a similar amount would be added to the 2003 deficit.
Speaking on Thursday, however, Mr McCreevy hinted at "savings in other areas" that might appear before year end.
If he decides to push the Bank for access to its reserves this year, it will not be his first time to do so. Towards the end of 2001, he invited the board of the Bank to consider what funds it could make available to the Exchequer.
The Bank was non-committal at that time but said it would conduct a review of its reserves once the euro changeover was complete.
Mr McCreevy has said he would examine the results of the review when they were available.
The Bank's Summer Bulletin, issued this week, shows that the accounting reserves were worth €1,844 million at the end of May. Some €1.2 billion of this was comprised of "capital and reserves", with the remainder held in the Bank's "revaluation accounts".
The capital and reserves come from income accumulated through the Bank's operations and represent the monetary difference between its liabilities and assets.
The revaluation account reflects unrealised gains from valuation changes and acts as a contingency provision against currency and other market fluctuations.
The Bank acknowledged in its 2002 annual report that any reserves that "may be found to exceed the bank's requirements" could be released to the Exchequer.
The Bank's governor, Mr John Hurley, has noted that reserves held by the Irish Central Bank are well below the average of other euro-zone states. His comments, made last month, could indicate that the Bank is not expecting to make much spare cash available to Mr McCreevy.
