Written answers

Tuesday, 28 February 2017

Department of Finance

Public Private Partnerships

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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241. To ask the Minister for Finance if public private partnership, PPP, unitary payments for potential infrastructure projects, in addition to those funded under the CIP 2016-2021, that are undertaken under the European Fund for Strategic Investments, may not be counted towards the deficit reference values when defining the fiscal adjustment under either the preventive or the corrective arm of the fiscal pact and that in the case of such a PPP unitary payment causing the Exchequer to run an excess over the deficit reference value, the Commission will not launch an excessive deficit procedure, EDP, if this excess is only due to a contribution made to a project co-financed under the EFSI, according to a European Commission communication (details supplied). [10322/17]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Deputy refers to unitary payments towards PPPS undertaken under the European Fund for Strategic Investments (EFSI) and to contributions to a project co-financed by EFSI. These are not the same thing.

Public Private Partnership (PPP) unitary payments for infrastructure projects, including those co-financed under EFSI constitutes general government expenditure and are relevant for the calculation of the general government balance and the assessment of compliance with Stability and Growth Pact (SGP) obligations.

With regard to contributions to EFSI, the European Commission communication referenced by the Deputy provides clarification on the treatment of these, debt guarantees and co-financing by Member States under the fiscal rules.

The communication makes the point that the fiscal adjustment required under the preventive arm of the SGP, until the medium-term budgetary objective is attained, is set in structural terms. This excludes one-off measures in addition to taking account of the economic cycle. The communication states that cash contributions provided by Member States to EFSI will be counted as one-off measures and excluded from the structural balance calculation, even if the payments in question were classified as general government expenditure.  The communication notes that the classification of transactions is a matter for Eurostat. 

Guarantees provided by Member States to EFSI do not impact on deficit or debt unless a guarantee is called, at which time it would impact on both the general government balance and debt.

In terms of co-financing individual projects, equity participation will have no impact on deficit or debt as long as there is a market rate of return. The equity may impact on debt levels if financed through government borrowing.

Since inception, Ireland has seen the main potential beneficiaries of EFSI as being in the private sector including entities such as PPP projects. In this regard, I am pleased that the Department of Health's Primary Health Care Centres PPP has successfully drawn down EFSI funds.  In addition, the Strategic Banking Corporation of Ireland (SBCI) has successfully engaged with European Financial Instruments such as the COSME and the InnovFin Guarantee Programme, both of which are made available under the EFSI SME Window. These support the financing needs of SMEs and aims to ensure that there is an adequate supply of affordable and appropriate credit to meet their needs.

As the Deputy will be aware, approval of Exchequer capital projects and PPP projects are the policy responsibility of the Minister for Public Expenditure and Reform and, in this context, he engages with each line Department on an ongoing basis to consider and assess projects and the full range of available funding options. 

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