Dáil Éireann Debate, Thursday - 18 May 2017
86. Deputy Michael McGrath asked the Minister for Finance the differences in terms of Eurostat rules or other restrictions in terms of the use of proceeds, between the sale of State assets such as Aer Lingus and Bord Gáis and the pending sale of a share in a bank (details supplied); and if he will make a statement on the matter. [23829/17]
View answerThere is no functional difference between the terms of use for the proceeds of the sale of Aer Lingus and proceeds from the partial disposal of AIB shares. In statistical terms, the disposal of the shares is considered a financial transaction, meaning that the proceeds will not be recognised as general government revenue and will not improve the general government balance. Proceeds from the disposal of shares would, in the first instance, go to the ISIF. These can then be transferred on to the Exchequer if the Minister for Finance so directs.
These type of transactions do not result in a beneficial impact to the General Government Balance (GGB) under the European System of Accounts 2010 (ESA 2010) framework. This is due to the fact that it is classified as a 'financial transaction' whereby it is essentially the exchange of one form of asset (shares, equities, loans) for another kind (cash).
Subsequent to the sale of Aer Lingus, a ‘Connectivity Fund’ was formed to invest the €335 million proceeds from the sale of the State's shareholding in Aer Lingus with the aim of enabling and enhancing Ireland's physical, virtual and energy connectivity. This fund is overseen by the ISIF which, as the Deputy will be aware, has a strict commercial mandate.
The Bord Gáis sale was treated differently as it was not the sale of a State asset. Rather, Bord Gáis made a decision to sell an asset and remitted the proceeds to the State as dividends. As these payments were "at or below the entrepreneurial income" of Bord Gáis they passed the Super Dividend test (ESA 2010, 20.206) and, as such, were recorded as dividends. Dividends are recorded as property income in the ESA framework. Therefore these dividend payments were recorded as General Government Revenue and thus improved the General Government Balance.
