Fianna Fáil Finance spokesperson Michael McGrath has strongly criticised the delay in investing the assets of the National Pension Reserve Fund’s (NPRF) Discretionary portfolio in the domestic economy following the publication of the NTMA’s annual report earlier this week which showed that nearly €2.5 billion of its assets are sitting in cash, representing 35% of the value of the discretionary portfolio at the end of December 2013.
A recent parliamentary reply indicated that this has subsequently increased further to €2.7 billion by the end of March this year. This represented a significant increase on the cash balance of €1.95 billion at the end of 2012 and €950 million at the end of 2011. Cash held in the NPRF is earning a return of approximately 0.04% a year.
Deputy McGrath stated: “In September 2011 it was announced that the Ireland Strategic Investment Fund (ISIF) was being established to support investment in the domestic economy which has been starved of capital in recent years. We were subsequently told in 2013 that the full discretionary portfolio would be sold off with the proceeds being invested in the domestic economy via the ISIF. Progress has extremely slow since then and while a large cash balance has been built up there has been little evidence to date of any investment which would make a discernible difference in terms of jobs and growth. This indicates that the Government is more interested in extracting publicity from multiple announcements of the same initiative than it is from ensuring that the plan is actually carried out.
“To date there has been some cash committed by the NPRF to various SME related funds but there is little indication as to what impact these are having. In some instances these investments have involved the purchase at a discount of existing SME loans that are close to maturity. While this may be attractive as a pure investment there is little economic benefit involved. The NPRF has also made a loan of €250 million to Irish Water to fund its metering programme but this process has largely been shrouded in secrecy so it is not possible to assess its economic value.
“The sum of money at the disposal of the NPRF is considerable. In fact it is more than twice the Exchequer capital budget for 2014. It has the potential to have a significant impact if deployed in the sectors of the economy with the greatest potential for a positive return. In simple terms investment today is the basis of economic growth tomorrow. The Government has finally passed the legislation to put the Ireland Strategic Investment Fund on a statutory footing but considerable opportunities may have been lost over the last number of years as the Government has dragged its feet on the issue. The cash the NPRF is holding generates a negligible return. By contrast there are many projects that the fund could invest in which would generate a long tern economic return. The commitment to invest in job supporting initiatives by the NPRF needs to be delivered upon with a much greater degree of urgency than has been seen to date.”