Wednesday, 27 November 2013

Questions (46)

Willie Penrose

Question:

46. Deputy Willie Penrose asked the Minister for Finance if in line with the commitment in the programme for Government, he will take steps to introduce the necessary legal and administrative mechanism to enable a strategic investment bank, which would be stand-alone, and along the lines of KfW in Germany and that which prevailed with the former Industrial Credit Corporation Bank, so as to assist in the development of small businesses; and if he will make a statement on the matter. [51042/13]

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Written answers (Question to Finance)

As the Deputy will be aware, the Government has decided to establish the Ireland Strategic Investment Fund (ISIF) which will absorb the National Pensions Reserve Fund (NPRF). Using the Ireland Strategic Investment Fund, we will maximise our resources to enhance growth in the Irish economy and improve key infrastructure to maintain Ireland's attractiveness as a place to do business and to create employment. Officials of my Department are currently preparing the necessary legislation which I anticipate will be enacted early next year. Already, in the lifetime of this Government, the NPRF has established funds that support both strategic projects and a number that support SME financing. Further assessment of the need to create a Strategic Investment Bank over and above the contribution expected from the ISIF will be informed by the requirements of the economy once the Government’s key immediate objectives for the repair of the banking system have been completed.

As the Deputy will be aware, the Taoiseach mentioned in this House that he had held discussions with Chancellor Merkel and they had agreed that work would be undertaken to find ways to reinforce Ireland’s economic recovery by improving funding mechanisms for the real economy, including access to finance for Irish SMEs. The German Government has asked KfW, the German development bank, to work with the German and Irish authorities swiftly, in order to deliver on this initiative at the earliest possible date. Officials of my Department have already exchanged working papers on this subject with KfW and the German Ministry of Finance. Discussions with the German Ministry were held in Berlin last week and there was a meeting between Department of Finance officials and KfW personnel in Frankfurt yesterday. We will be moving forward with this work with KfW and other key stakeholders over the coming weeks both here and abroad.

The Government’s intention is to ensure with the support of Chancellor Merkel that an effective and successful initiative emerges from the process. We will therefore be discussing any and all approaches that meet the strategic objectives of both States and ultimately facilitate lending to the real economy, in particular to SMEs in Ireland. Although the precise form and delivery mechanism for any assistance has yet to be agreed, discussion with German colleagues will consider appropriate options for funding the recovery of the Irish Economy in the course of our work with KfW and the German Government.