Dáil Éireann Debate, Thursday - 11 July 2013
216. Deputy Michael McGrath asked the Minister for Health the timetable his Department has had from European Union officials to seek permission for an injection of capital into the VHI; if such an injection of capital would impact on the general Exchequer balance for 2013; and if he will make a statement on the matter. [34119/13]
View answerMy Department is in regular contact with the EU Commission in relation to the authorisation of the VHI and related State Aid issues. The Government is taking all the necessary steps to bring the VHI to the point of authorisation and the Department of Health is working closely with the VHI and the Central Bank of Ireland. The Central Bank will decide on the VHI's capital requirements and readiness for authorisation and the European Commission must approve any capital injection, under State Aid rules. When these steps are taken, the Government will then make a final decision on authorisation and the injection of any required capital.
In the national accounts, capital injections by government into a publicly owned company are treated as transfers and worsen the general government balance if they are made to cover accumulated (or expected) future losses. The payment to VHI is intended to further strengthen the reserves and is not being made to compensate for accumulated or expected losses. While the VHI does not pay dividends to government, the capital injection by government will further increase the value of the company and will allow it to continue to operate on the market. As such, the CSO considers that it should be treated as an injection of equity and it should therefore not worsen the general government balance.
