The Republic's Finance Minister Brian Lenihan has scotched claims that a "tall Hungarian with glasses" was working inside his department on behalf of the European Union.
He was speaking amid claims that the EU was increasing its scrutiny of the Government's plans to achieve €6bn (£5.1bn) in spending cutbacks and taxation increases in the Budget, due on December 7.
During ministers' questions in the Dail yesterday, Mr Lenihan was also pressed about his strategy for returning in the New Year to the bond markets, which are currently charging a record high yield of 8.5% on 10-year Irish government bonds. This would make borrowing unaffordable for the State.
Mr Lenihan said he wanted to put it on the record that there were no staff from the EU or the European Central Bank working full-time in his department headquarters on Merrion Street, and there were no permanent facilities for them.
He said the Hungarian man who had been mentioned by the opposition was a member of the staff of EU economics commissioner Olli Rehn, who liaised with the department.
"I heard on some broadcast that this Hungarian gentleman works in the Department of Finance," he said.
Mr Lenihan said it was natural and understandable that Mr Rehn would have an official to liaise with the State because there were 27 EU states in total to keep track of. "There are officials who advise him on Slovenian matters, Slovakian matters, German matters, French matters. This is the official who helps him with Irish matters," he said.
Meanwhile, Fine Gael finance spokesman Michael Noonan said a strategy was needed so that the Irish state could safely re-enter the markets with "a feeling of confidence that whatever is offered will be taken up at reasonable prices".
Mr Lenihan said there were two key elements to the strategy for returning to the markets - delivering a credible four-year plan and passing the Budget. He said the Irish government had borrowed enough money to last until the middle of next year.