AN EXTERNAL review of systems in the Department of Finance, the Central Statistics Office and the National Treasury Management Agency (NTMA) is to take place to establish how Government debt was overstated by €3.6 billion.

Minister for Finance Michael Noonan said the accounting error, which overstated the debt by 2.3 per cent, appeared to be “human error on the part of a particular official”. But he added: “I don’t think the big issue is chasing an official in the Department of Finance who made a mistake.” He said the big issue was to establish if the systems were in place to ensure the figures were correct.

The Department and the NTMA initially disagreed over responsibility for the mistake but Mr Noonan conceded yesterday that the mistake occurred in his Department.

The department’s secretary general had asked for a full report and a systems review would also take place, which would not be internal. “It cannot be internal. It has to examine the decision in the Department of Finance, the relevant section of the CSO and the NTMA because it occurred in the relationships between the three.”

Fianna Fáil finance spokesman Michael McGrath, who raised the issue in the Dáil, described the mistake as a “humiliating schoolboy error” by the department.

Describing the error as “astounding”, Mr McGrath said “it is a wholly unsatisfactory situation that Ireland’s official debt position was overstated by over 2 per cent of GDP and investors abroad, looking at Ireland over the last number of months would have been basing their investment decisions on incorrect information”.

Mr Noonan said the issue was signalled at a technical level to the department by the NTMA in August last year. “It would seem that the significance of the matter was not appreciated at that time.” It was raised again by the NTMA “at an official level” in the work for the publication tomorrow of the four-year financial forecast.

Mr McGrath said the NTMA’s statement gave the impression that the error had been raised repeatedly by the agency. Mr Noonan told him “they may have made verbal contact, I don’t know. The record shows two contacts.”

The Minister who was informed about the issue on Tuesday, said the double accounting arose because the Housing Finance Agency borrowed directly from the NTMA instead of from the open market last year.

He said general debt was compiled by adding central government debt borrowed by the NTMA with the debt sourced on the open market.