NTMA chief John Corrigan: needs to refinance tens of billions in bond debt by September

Government officials have received some international support for their view that the soaring budget deficit – caused by an accounting rule – will not panic the in­vestors whom Ireland will need to tap in the coming months.

Last week, the International Monetary Fund and the Economic and Social Re­search Institute separately highlighted the Eurostat ruling that insists Ireland account for the funds Anglo Irish will start to receive this year. The government plans to pay that money in instalments over the next 10 years. The IMF said the treatment could more than double the official annual government deficit to more than 25% of GDP – an annual deficit normally only experienced by governments emerging from a long war.

Chris Pryce, the director of Fitch Ratings who helps set Ireland's credit rating, said the accounting treatment should not "on the face of it" require the government to take on extra borrowing this year. "It is saying that [Eurostat] wants to account for it all this year. The government had been previously saying it wanted to account for 10% of it year by year," he said.

The IMF report last week said that the so-called promissory notes issued to Anglo and other lenders in early 2010 amounted to 8.5% of GDP. "If these injections are considered capital transfers, the 2010 deficit would increase by this amount… the further possible injection of 5% of GDP would add correspondingly to the 2010 deficit," it said.

The IMF also said the liquidity pressures on the Dublin banks remained "serious" as they seek to refinance tens of billions of euro in bond debts by the end of the September.