Update: Attracting Savings to the Private Sector 10th July 2014

QUESTION NO:   48
DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)
by Deputy Bernard J. Durkan
for WRITTEN ANSWER on 09/07/2014  

 To ask the Minister for Finance the extent to which consideration might be given by his Department into the launch of a Government bond to attract savings to the private sector in order to meet infrastructural deficits of a pivotal nature such as the building of public sector housing and other major capital works such as hospitals, schools, flood prevention and damage repair and thereby achieving the provision of vital and urgently required facilities likely to benefit the economy with no impact on borrowing requirements; and if he will make a statement on the matter.
 
REPLY.

All monies raised through Government borrowing are paid into the Central Fund and used to fund Government spending as approved by the Oireachtas. It has never been the custom to   link borrowing to specific projects as to do so would limit the flexibility of the Government in managing the State’s finances.

That said, there are a number of options available to individuals who wish to help support the Government’s work in promoting economic growth and employment.

The National Solidarity Bonds were introduced to provide a wider range of options for retail investors. The Minister for Finance in announcing Budget 2010 launched the 10-year National Solidarity Bond, the purpose of which was to allow citizens an opportunity to invest and provide money to the State to stimulate economic recovery and to assist in the maintenance and creation of employment. Following the success of the launch of the ten-year National Solidarity Bond a four-year National Solidarity Bond was launched in 2011.

The NTMA’s other State Savings products, available through any Post Office, allow people to support the Exchequer through Savings Bonds, Savings Certificates and Instalment Savings.

There are also possibilities in place for people interested in investing in longer-term Government bonds. Irish sovereign bonds are available through seventeen Primary Dealers recognised by the National Treasury Management Agency (NTMA). The NTMA has published information on their website (www.ntma.ie) which gives the names and contact details for institutions which sell bonds to the public, and the fees they charge.

The NTMA will continue to encourage personal savers to purchase the National Solidarity Bonds and the other NTMA State Savings products. The NTMA keeps the suite of State Savings products and the interest rates paid on them under constant review to ensure that the products remain competitive and attractive to retail investors. These products have been an important and dependable component of Government borrowing for many years and make a valuable contribution to the national finances.

I am happy to confirm that the Government remains committed to exploring alternative means of financing capital projects. The Government has announced the creation of the Ireland Strategic Investment Fund (ISIF) to channel investment from the National Pensions Reserve Fund (NPRF) towards productive investment in sectors of strategic importance to the Irish economy. Within its existing statutory investment policy and in line with the ISIF announcement, the NPRF has undertaken a number of investments and initiatives under which NPRF capital will be invested on a commercial basis in Ireland. The NPRF has in particular committed to invest in infrastructure (€250 million) and Public-Private Partnership (PPP) projects (€118 million).   Investment in social housing will fall within the remit of the ISIF so long as it is commercial in nature.

The Government is also taking a number of actions with respect to the provision of social housing which are detailed in the recently-published Construction Strategy. The National Asset Management Agency (NAMA) has cooperated actively with the Department of the Environment, Community and Local Government and with the Housing Finance Agency in seeking to match the residential stock controlled by its debtors and receivers with the requirements for social housing.