Bernard Durkan (Kildare North, Fine Gael)
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58. To ask the Minister for Finance if the concept of a specific Government bond may be considered to fund the addressing of major infrastructure deficiencies such as those in respect of water, energy, roads, telecommunications, coastal erosion and flood alleviation or prevention that may otherwise have an impact on the Government's balance sheet; and if he will make a statement on the matter. [42607/14]

Michael Noonan (Limerick City, Fine Gael)
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The proceeds of all borrowings by the Exchequer, as well as tax revenues, non-tax revenues and other receipts are lodged to the Exchequer account at the Central Bank of Ireland to fund on-going Government expenditure.

The National Treasury Management Agency (NTMA) has advised that project-specific bonds issued by the State which are linked to a specific project and which are serviced and repaid from the Exchequer in the same way as standard Government bonds, may be of limited interest to investors as they would be concerned about a relative lack of liquidity. Investors in project-specific bonds would require higher yields than standard Government bonds to reflect the lower liquidity.  Such project-specific bonds, if issued by Government, would be on the Government's balance sheet.

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.   The latter type 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 / investors for PPP projects.

I am happy to 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.