asked the Minister for Finance his views on the conclusion of a media report (details supplied) to the effect that the national debt in 1986 was over-estimated by the following amounts due to the following factors: (i) by £530 million in respect of deposits held by the Exchequer in overseas banks which was included in the national debt, although not properly a debt at all (i) by £1,784 million in respect of amounts of loans raised by the local authorities by the local authorities loans funds which in turn raised the finance from general Exchequer borrowing which constituted double counting and (c) £857 million in respect of Government stock held by Government Departments themselves and hence money owed by the Government to itself and not properly debt; if he has revised the national debt figures in respect of any or all of these factors; and if he will give the current national debt, for the latest available date (a) without the exclusion of the above factors and (b) after exclusion of the above factors.
Ceisteanna—Questions. Oral Answers. - National Debt Over-Estimation.
The national debt statement forms part of the Finance Accounts which are prepared annually on a gross accounting basis. The total national debt figure in the statement as at 31 December 1986 (Account XXIV in the Finance Accounts) was not overestimated and valid comparisons with previous years' figures can be made.
It is not correct to assume that the amounts on deposit outside the State do not properly constitute a debt. It is also incorrect to assume that all stock shown in Central Bank statistics as held by Government Departments represents money owed by the Government to themselves. A substantial amount of this stock is held by funds such as the Post Office Savings Bank fund where the liability is to depositors, not to the Government. To the extent that assets were held against the amounts referred to at (a) and (c) of the question under reply, these were shown in the Statement of Capital Assets — under "Proceeds of Foreign Borrowing" and "National Loans Sinking Funds"— in Account XXVI of the 1986 Finance Accounts.
With regard to the amounts raised by local authorities from the Local Loans Fund, I informed the House on 15 October, 1987 during the debate on the Local Loans Fund (Amendment) Bill that there would be a technical accounting adjustment to the national debt figure following the enactment of that legislation. This will result in the amounts previously shown by way of footnotes to the national debt statement being netted off within the statement itself and so reducing the total debt figure significantly. It will be necessary to revise statements for previous years in order to maintain comparability between them. As the national debt statement is being recast to cover the changes in the Local Loans Fund, my Department have been looking at the composition of other entries to see if a clearer picture of the position can be presented. Departmental consideration of this matter is at an advanced stage and I would hope to be able to incorporate the changes in the presentation of the statement when the 1987 Finance Accounts are presented to the House before 30 June 1988.
In the light of the foregoing considerations, I do not consider it useful to give figures for the national debt on the basis suggested by the Deputy. I would also like to reassure Deputies that if a different approach is taken to presenting the national debt for 1987, figures will also be prepared on the same basis for earlier years and quoted in the Finance Accounts for comparison purposes.
Will the Minister indicate why he believes money held on deposit by the Government in foreign banks should be included as part of the national debt?
Because that is the way the accounting procedure has been done.
Is the Minister aware that this accounting procedure has been questioned in that it has been suggested, not without reason, that money held on deposit which the Government could withdraw at any time could hardly be described as money owed by the Government? In fact, it is money owed to the Government. Why should that sum, put at £530 million by the economist who wrote the article in question, be included as debt? The Minister asserted that it should not be included but he did not say why.
The national debt has traditionally been calculated on a gross basis and that is the reason for that.
Accepting that that is the case, can the Minister say if it is his view that that is the way a debt should be calculated? Will he not agree that in respect of his personal finances he would not calculate his debts — if he had any which, hopefully, he has not — in this way? He would not present them on a gross basis; he would take any money owing to him into account as long as that was capable of being quickly obtained. Will the Minister go a little further than simply asserting that this is the way it has always been done as if that was sufficient justification? In regard to the £857 million in stocks held by Government Departments, will the Minister give an indication of how much of that is of the Post Office Savings Bank type, where there is a counterpart liability to the public, and how much of it represents money held by Government Departments solely for the purpose of dealing in stocks?
It is not my fault that this is the way we operate. The Deputy was Minister for Finance and he did not take any action to change the position. In fairness, the previous Administration had started to cut out circular transfers in the local loans area and I give them full credit for that. We have continued that policy and by June I hope to publish the figures. We will then give the comparisons for all years.
I am asking the Minister to go further.
I have told the Deputy that this is at an advanced stage of consideration in the Department and we will introduce any further technical changes we consider necessary so as to get a clearer picture about the national debt. With regard to the question about the Post Office Savings Bank, I should like to tell the Deputy that of the £857 million a total of £475 million represents the Post Office Savings Bank money.
Will the Minister deal with deposits in foreign banks and say why he regards them as debt?
They are regarded as debt because they were taken into the Exchequer in 1987 and represented real liabilities then.
(Limerick East): I am sure the Minister is aware of the report by the ESRI predicting stabilisation of the national debt at the end of 1989 based on certain assumptions. That report refers to the debt stabilising at 163 per cent of GNP and I should like the Minister to clarify now, or subsequently, the yardstick he intends to use when referring to this in the future. If the tables are corrected as a result of the Local Loans Fund Bill, 163 per cent of GNP falls down to something in the region of 140 per cent or 145 per cent. If the tables are corrected fully in accordance with the suggestions Deputy Bruton is making, the debt stabilises at about 135 per cent of GNP. We should all use the same yardstick when measuring progress. There are three different sets of figures now for debt-GNP stabilisation depending on whether we are looking at the traditional tables of account, those that have been modified and will be further modified by the Minister from I May when the Local Loans Fund Bill is implemented by order, and the full rationalisation that Deputy Bruton has talked about has effect. Will the Minister clarify the position so that we will all be using the same yardstick?
Absolutely. We will be dealing with this matter when we reach other questions tabled by Deputy Noonan.