THE GOVERNMENT will announce details today of a fund that will use resources from the National Pension Reserve Fund to finance strategic investment.
The Strategic Investment Fund will be presented by Government as the forerunner to a strategic investment bank, a key policy of the Labour Party included in the programme for government.
The fund will be set up following legislative changes affecting the investment policy of the pension fund, the discretionary portion of which is now below €5 billion. This will allow resources to be channelled from the fund towards what is described as “productive investment in the Irish economy”.
In addition to the money transferred from the pension reserve fund into the new strategic fund, the Government will also seek matching commercial funding from private industry. The intention will be to “target investment into areas of strategic significance for the future of the Irish economy”, said a source.
Today’s announcement will represent the first steps towards establishing a strategic investment bank and is designed to face down criticism that such a development is impossible. The feasibility of such a bank has been questioned since the Coalition has been formed, especially when the bank recapitalisation programme remained silent on the issue.
Opposition parties have claimed that the bank will not be realisable.
Yesterday Fianna Fáil’s Billy Kelleher said Taoiseach Enda Kenny had all but confirmed a “Government U-turn” on the bank. In a letter to the Cork North Central deputy, Mr Kenny had stated: “The concept of a strategic investment bank would be difficult to implement in current market conditions.” A Government source accepted that it was not possible to set up such a bank now but insisted the investment fund would be its forerunner.
A second development will be signalled today when the Minister of State in charge of the New Era programme, Fergus O’Dowd, will announce the setting up of a unit within the National Treasury Management Agency to drive the programme forward.
The programme envisages the selling of State assets to allow the set-up of new State utility companies.