Strategic ‘bank’ scaled down

STATE plans for a job creation “strategic investment bank” are to be replaced with a “fund” as the pre-election promise is “difficult to implement in current market conditions”.

In a letter to Fianna Fáil TD, Billy Kelleher, after the issue was raised in the Dáil yesterday, Taoiseach Enda Kenny said the fund is a more sensible approach “in the short term”.

The Government is considering increasing the sale of state assets if the troika agrees to allow a substantial proportion of the money to be used for investment. The fund will be used to for large capital projects and as a lender to small and medium businesses (SMEs), which will help to create jobs but will have less scope than the bank proposal had hoped.

“In the short-term, the concept of a Strategic Investment Bank would be difficult to implement in current market conditions.

“It is therefore proposed initially that the objective is best delivered by applying a number of solutions that are targeted at particular segments of the SME sector and in infrastructure, as part of a Strategic Investment Fund,” Mr Kenny wrote.

The change had been expected in political circles in recent weeks. However, Fianna Fáil senator Marc Mac Sharry, claimed it was a “cynical U-turn”.

Last week, Government officials said they were confident the EU/ECB/IMF troika would allow it to use money saved in an upcoming spending review for the jobs creation initiative.

The bank was a commitment in the Programme for Government, but finding funding has proven difficult.

The issue is expected to feature heavily in talk with EU/IMF chiefs next month, which aims to hammer out an economic blueprint for the next three years.