Tony McLoughlin (Sligo-North Leitrim, Fine Gael)
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61. To ask the Minister for Finance the savings the National Treasury Management Agency will incur from the proposed cut in the national Prize Bonds draw; the way these savings will be used on behalf on the State; and if he will make a statement on the matter. [28512/13]

Michael Noonan (Limerick City, Fine Gael)
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The National Treasury Management Agency (NTMA) is responsible for the State Savings schemes which includes Savings Certificates, Savings Bonds, Prize Bonds, the National Solidarity Bond and Instalment Savings, as well as the Deposit Accounts such as the Ordinary Deposit Account and the Deposit Account Plus which are managed on behalf of the NTMA by An Post. The NTMA keeps the suite of State Savings products and the interest rates paid on them under constant review to ensure that the products remain competitive and attractive to retail investors, while balancing the funding requirements and financing costs of the State. The NTMA announced on 2 June 2013 new rates across the range of State Savings products, including Prize Bonds. These reflect the reductions in interest rates in the savings market generally and the reduced cost of Government borrowing in the wholesale markets as a result of the declines in sovereign bond and Treasury Bill yields.

The value of the prize fund for the Prize Bond draw is calculated by applying the prevailing variable interest rate to the value of prize bonds outstanding. On 2 June 2013, the rate used to calculate the prize fund was reduced from 2.25% per annum to 1.75% per annum.

At end-May 2013, €1.78 billion of prize bonds were outstanding. The savings over a full year as a result of the 0.5% reduction in the interest rate used to calculate the prize fund would be €8.9 million (assuming the amount of prize bonds outstanding remains unchanged). This would represent a saving to the Exchequer in the cost of servicing the National Debt and would accordingly be of benefit to the Exchequer finances.