Mick Wallace (Wexford, Independent)
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246. To ask the Minister for Finance his plans to use the €2 billion of bailout funds that the Government expects to receive back from Allied Irish Banks and Permanent TSB, details of which he mentioned in the 2015 spring statement, for investment in public services rather than for debt reduction; and if he will make a statement on the matter. [33108/15]

Michael Noonan (Limerick City, Fine Gael)
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I assume the Deputy is referring to the €0.4 billion PTSB and €1.6 billion AIB contingent convertible capital notes (CoCos) which were due for redemption in July 2016.  The redemption of the CoCos was provided for in the Exchequer estimates contained in the Stability Programme Update. 

It should be noted that in the intervening period, PTSB repurchased the €0.4 billion in CoCos which was received into the Exchequer in May of this year.

When the Government invested in the CoCos, there was no impact on the general government deficit as they were considered a financial transaction.  The corollary of this is that when they are redeemed, it also has no impact on the general government deficit.  Spending these receipts would have a negative impact on the deficit.

Therefore, the receipt of these monies will benefit the Exchequer, reduce the Exchequer Borrowing Requirement and result in debt reduction.  In this regard, I would emphasise the importance of continuing to reduce Ireland's debt ratio over the medium term as a pre-requisite for ensuring market confidence in Ireland and freeing up future fiscal capacity for productive investment rather than spending on interest.