The Minister for Finance has said the new Governor of the Central Bank will take up his position as planned in September.
Paschal Donohoe said he wished a budget leak in New Zealand which led to an inquiry into Mr Makhlouf's conduct had not happened.
But he added that the outgoing Treasury Secretary has a strong track record of service over many decades.
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"Mr Makhlouf has had a thirty year record of public service all over the world, and during that thirty years he has had an unblemished record and has performed and led very large organisations and dealt with very different policy matters, from New Zealand to the OECD to the UK," Mr Donohoe said.
"He has been an exemplary public servant. I of course wish that the incident that has now been the cause of this report had not happened.
"I have considered the report in its entirety and I have noted in the report it makes reference to his integrity, his political neutrality and his desire to act in good faith at all times."
New Zealand's State Services Commission criticised Gabriel Makhlouf's "clumsy" handling of embarrassing budget leaks last month.
Mr Makhlouf initially said the leaks resulted from systematic and deliberate hacking.
However, it soon emerged that the treasury had not fallen victim to a sophisticated cyber-attack, but had accidentally published budget details on its website.
New Zealand watchdog slams Makhlouf's handling of website leak pic.twitter.com/Ic1Q0iKXHe— RTÉ Business (@RTEbusiness) June 27, 2019
Asked if he was taking a personal risk in proceeding with Mr Makhlouf's appointment in the circumstances, Mr Donohoe said he took responsibility for appointing the new governor.
He said the process that led to the appointment was clear and independently run.
The minister said he was confident that when Mr Makhlouf takes up his new role, the qualities that led to him having such a successful career in public service all over the world up to this particular incident happening, will become apparent to stakeholders in our economy and to the country.
The State Services Commission said Mr Makhlouf was more intent on blaming others for the security breach than addressing his own failures and those of his department.
"I have concluded that Mr Makhlouf failed to take personal responsibility for the Treasury security failure and his subsequent handling of the situation fell well short of my expectations," SSC chief Peter Hughes said.
"Mr Makhlouf is accountable for that and I'm calling it out."
The SSC found Mr Makhlouf acted in good faith when he first described the leaks as a hack and he had shown no political bias against the opposition that released the information.
But it found he was less forthcoming after receiving updated advice about the nature of the leaks and continued to imply the problem was a hack, rather than a treasury mistake.
Mr Hughes said it would be meaningless to punish Mr Makhlouf when he was leaving anyway, but the bureaucrat's reputation had been damaged by his failure to handle the leaks properly.
Mr Hughes said he was disappointed Mr Makhlouf had declined to publicly apologise over the affair.
In a statement, Mr Makhlouf said the investigation into New Zealand's budget leaks was "conducted thoroughly and fairly".
Mr Makhlouf apologised that the budget information was not kept secure.
"The report confirms I acted at all times in good faith and with political neutrality. It also confirms that I acted reasonably, other than in my descriptions of the incident," he said.
"I am pleased that my honesty and integrity are not in question," he added. Mr Makhlouf said he would be making no further statements on the matter.
Minister Donohoe announced Mr Makhlouf's appointment as the Central Bank's new Governor last month.
He will also sit on the Governing Council of the European Central Bank from 1 September.
Mr Makhlouf will be the first non-Irish national to lead the bank, replacing Professor Philip Lane, who is now the European Central Bank's Chief Economist.
Additional reporting AFP