A senior official in the Department of Finance, working in the area of banking and financial services, made phone contact with the employer of economist Jim Power last month after he made unfavourable comments about the economy.


The official rang Friends First after Power gave a contribution to the Financial Times about the economy. Power said the scale of bank liabilities was such that the economy was facing a major threat. The official, who declined to comment last week, expressed annoyance at Power's contribution.


Power, who also declined to comment last week, is understood to have been unhappy about the department approaching his employer, rather than him.


Asked last week was it appropriate for senior officials to contact institutions under their supervision in this manner, the department said: "The Department of Finance maintains contacts with financial institutions on a regular basis."


A department source said: "We are eager to see responsible comment on Ireland in the international media''.


The department rejected any suggestion the government was trying to muzzle economists who disagreed with their forecasts.