Having been frequently and thoroughly demonized over the past few years, off-balance sheet entities are now set to save the Irish government's debt levels from reaching comical magnitudes. The recently created National Asset Management Agency (NAMA) will be allowed to deal with the €77 billion in primarily mortgage loans taken off the balance sheets of Irish banks in solitude.
"The preliminary decision of Eurostat means that the acquisition of the assets from the financial institutions by NAMA may be treated as off-balance sheet in the budgetary arithmetic under European national accounting rules," Lenihan said. "In other words, it will not increase the general government debt ratio and neither will our budget balance be directly affected by the NAMA initiative," he said in a statement.
But if there is one thing the financial crisis has done, it's demonstrated the need for accuracy from agencies responsible for critical macroeconomic and accounting issues. Based on today's revelations, Ireland may want to hedge against anything Eurostat says.
European finance ministers said they were stunned by the an estimate placing Greece's deficit at more than 10 percent of the country's gross domestic product.
Estimates by Eurostat, the official data office of the European Union, put the deficit near 3.7 percent of Greece's GDP, the EUobserver reported Tuesday.
In a meeting in Luxembourg, Greek finance minister George Papaconstantinou reported the figure would actually be between 10 percent and 12 percent