Tuesday, 25 June 2013

Questions (200)

Andrew Doyle


200. Deputy Andrew Doyle asked the Minister for Finance if officials in his Department or the Central Bank of Ireland have been in consultation with the European Central Bank regarding a programme to provide cheap funding to small businesses, a programme similar to that run by the Bank of England in the United Kingdom entitled Funding for Lending that commenced in 2012; and if he will make a statement on the matter. [30318/13]

View answer

Written answers (Question to Finance)

The European Central Bank works closely with the European Investment Bank (EIB) and with the EU Commission. The ECB is an independent body in which I have no role in relation to its internal deliberations. Regarding an ECB role in providing funding directly for small businesses, this falls in the realm of monetary policy. Monetary policy issues are discussed at the Governing Council and the President of the ECB communicates on behalf of the ECB. In this regard, I would note that the President addressed this issue during the April, May and June post Governing Council press conferences. The EIB, however, has highlighted SME financing as one of its priorities. In relation to Ireland, this has been evidenced with the recent announcement of the EIB of the provision of €200 million for investment in AIB for small and medium companies across Ireland. This represents the latest EIB support for SMEs in Ireland since an earlier lending programme intermediated by AIB in 2011. As part of the Management Committee visit to Ireland in April, the EIB delegation met with myself and a number of other Government Ministers including Minister Bruton, where it was highlighted that access to funding for Irish SMEs is a priority for Ireland.

Since Mr Werner Hoyer’s appointment as President of the EIB in 2012, there has been a deepening and widening of engagement between Ireland and the Bank. A joint High Level Working Group (HLWG) was established to identify concrete and flexible mechanisms to enhance the Bank’s support for Ireland’s growth agenda. The EIB and Ireland are strongly committed to working together to enhance the Bank’s activity in the country and this commitment is beginning to bear results. EIB group activity in Ireland in 2012 was almost €600m, representing an increase of over €100m in 2012 over 2011 levels and covering a diversified range of sectors and transactions. Financing for SMEs is a key part of this, and a number of Government Departments are working closely together to ensure that Ireland secures as much funding for our SMEs as possible.

Earlier this month, my colleague, the Minister for Education and Skills signed a €100 million loan agreement with the European Investment Bank (EIB) to further support the Government’s investment in school buildings. SMEs are likely to have significant involvement in these building projects.

There have also been developments in relation to non-bank funding at European level. In December 2012 the Department of Finance hosted a High-Level Workshop on Non Bank Funding of Growth and Jobs in Europe, and the report of this event is now available on the Department’s website at http://www.finance.gov.ie/viewdoc.asp?DocID=7640.

Ireland is committed, during its EU Presidency and beyond, to facilitate and encourage the development of an appropriate set of policy options that will support long term financing of growth and employment in Europe, with the provision of capital to SMEs a key aspect of this. The Irish Presidency is fully supportive of the Commission’s work in this area as highlighted by the publication in March of a Green Paper on Long-Term Financing of the European Economy. The Irish Presidency ensured that the issue of long-term financing, including non-bank funding, was discussed at the Informal ECOFIN in Europe. It was agreed at the ECOFIN that the Economic and Financial Committee of the European Council would be asked to progress this issue.

Following a proposal made by the Irish Presidency, the EFC have decided to establish a High-Level Expert Group on Long-Term Finance and SMEs. This group will focus its work on concrete capital market instruments to stimulate and permanently diversify SME and mid-cap financing and the financing of infrastructure projects. It will also investigate the role of multilateral and national development/public investment institutions in catalysing private finance. The ECB, EIF and EIB are all represented on the Group. The Group will be co-chaired by John Moran, the Secretary General of my Department and Alberto Giovannini (CEO, Unifortune) and will report back in the autumn.