Written answers

Wednesday, 3 February 2010

Department of Finance

Capital Expenditure

9:00 pm

Photo of Seán SherlockSeán Sherlock (Cork East, Labour)
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Question 111: To ask the Minister for Finance the details of the national solidarity bond, announced in budget 2010; if the intention is to ring-fence all money borrowed through this mechanism for capital investment; if these funds will be used to part-finance or to supplement the 2009 to 2014 capital expenditure programme envisaged in the latest stability programme update, published alongside Budget 2010 in December 2009; and if he will make a statement on the matter. [5328/10]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I announced in Budget 2010 that the Government intended to introduce a National Solidarity Bond.

This bond will effectively be a new form of our state savings products which are aimed at the retail investor. We already have savings bonds and savings certificates, which are three and five and a half year investment products managed by the National Treasury Management Agency. The new bond will be a longer-term product which will be attractive to people who wish to invest for up to 10 years. Where an investor wishes to encash their investment before the final maturity date of 10 years they will be able to do so.

The structure is quite innovative — there will be an annual interest payment and a final redemption bonus payable. The final investment bonus will be payable to investors who encash their bonds after five, seven or ten years.

Although this new bond will give ordinary citizens an alternative route to fund the State to help to stimulate economic recovery and create employment, it is important to note that the proceeds of the bond will not be used to fund additional expenditure over and above what has already been decided on by the Government in the context of the Budget.

An overall multi-annual capital investment programme of over €39 billion for the period 2010 to 2016 has been announced. In terms of 2010 the planned amount of capital funding by government is €6.445 billion as signalled in the December Budget. For each of the years from 2011 onwards a sum of €5.5 billion is being provided. These large amounts of overall government investment are deemed appropriate taking all factors into account.

The National Treasury Management Agency and my Department are working on the details of the bond and I look forward to it being available for subscription in the near future.

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