Irish Government accused of missed opportunity

The Government has been accused of not using funds arising from the sale of shares in the country’s pillar banks to invest in long-term projects and help stimulate employment growth.

Billions of euros have been realised from the sale of Government-held shares in State-supported banks AIB and Bank of Ireland since 2010 after the lenders were propped up with public money in the aftermath of the financial crash.

The bank shares are held by the National Pensions Reserve Fund (NPRF), which was established by former Fianna Fáil finance minister Charlie McCreevey in 2001 to provide for future pension needs.

Having built up a war chest of €22bn in 2009, the fund was then raided by the current Government and its predecessor to help the State meet its commitments during the recent recession.

New figures show that just one withdrawal of €1.63bn — which was transferred to the Exchequer — has been made from the NPRF this year.

Given current economic conditions, this represents a missed opportunity, said Fianna Fail finance spokesman Michael McGrath.

“Any withdrawals from the pension fund should be fully explained in terms of the purpose to which they are being put,” he said.

“Given the very low interest rate on the national debt at the moment there is a clear advantage to using the proceeds from the sale of bank shares held by NPRF to invest in long-term projects which support employment and generate economic returns.

“The Government simply cannot be allowed to use it as a slush fund for short-term vote winning announcements.”

Up until 2012, a contribution equivalent to 1% of GNP was required from the Exchequer to the NPRF each year while under legislation passed in 2009 a further €1.41bn was paid into the fund in 2009 to help recapitalise AIB and Bank of Ireland.

An amendment to the NPRF Act in 2012 allowed the finance minister to suspend the annual contribution in 2012 and 2013.

On December 22, the NPRF transitioned to the Ireland Strategic Investment Fund which has a statutory mandate to invest on a commercial basis to support economic activity and employment in Ireland.