Dáil Éireann Debate, Thursday - 14 January 2016
110. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the concept of the use of Government development bonds will be utilised to fund vital infrastructural projects such as drainage and flood alleviation or a public housing programme to ensure that such costs do not appear on the Government's balance sheet; and if he will make a statement on the matter. [1810/16]
View answerUnless provided for by specific legislation, all revenues including the proceeds of Government borrowing are paid into the Exchequer's Central Fund. Revenues are not linked to specific projects but rather are used to fund Government expenditure generally, including capital and infrastructural expenditure.
The National Treasury Management Agency (NTMA) has advised that Government bonds issued by the State which are linked to specific projects may be of limited interest to investors due to concerns about a relative lack of liquidity. Reflecting this lack of liquidity, investors would likely require higher yields than standard Government bonds.
However in the case of a Public Private Partnership (PPP), where the State selects a private consortium to Design, Build, Finance & Operate State infrastructure, that private consortium can issue project-specific bonds. Such bond issuance may be deemed to be outside of General Government provided that the necessary risks are contractually transferred to the private sector in line with Eurostat rules. These latter type of bonds are considered by investors to carry significantly more risk than standard Government issued bonds and consequently require higher yields to reflect the risk profile. The National Development Finance Agency (NDFA) has advised that there is currently a strong supply of funders for PPP projects.
I can confirm that the Government remains committed to exploring alternative means of financing capital projects. The NDFA is charged with advising on the optimal means of financing the costs of all public investment projects over €20 million in order to achieve value for money, including the €2.25 billion stimulus package announced by the Government in July 2012. NDFA continues to facilitate securing funding for both PPPs and non-PPP capital projects from a wide range of sources including domestic and international banks, institutional investors and supranational organisations such as the European Investment Bank and the Council of Europe Development Bank.
