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Half of proceeds from State assets sale must pay down debt – Troika

The government is keen to use all of the money from the sale of State assets in “one shape or another” to fund job creation initiatives but the Troika appears more focussed on reducing the debt.

Minister for Public Expenditure and Reform Brendan Howlin (File)
Minister for Public Expenditure and Reform Brendan Howlin (File)
Image: Mark Stedman/Photocall Ireland

THE TROIKA HAS reaffirmed that Ireland will use half of the money raised from the sale of State assets to pay down its debt though the government appears more keen to use the money to seek additional lending to fund job creation.

Under a deal reached with the Troika in May of last year, the government plans to use half of the proceeds from the Sale of state assets for job creation measures while using the other half as a fund to underpin additional lending from institutions like the European Investment Bank.

This money would also go towards job creation initiatives, the government believes.

But in a draft European Commission report seen by TheJournal.ie the Troika says that the Irish government is “committed under the programme to use at least half of the privatisation proceeds for debt reduction”.

In answer to a parliamentary question in October last year, Public Expenditure and Reform Minister Brendan Howlin was keen to emphasise that money raised from the privatisation of State companies would be used for job creation.

He said: “It has been agreed with the Troika that all of the Government’s proceeds from the programme will be available, in one shape or another, to support job creating initiatives in the economy.”

In the answer, Howlin goes onto acknowledge that the other half of the money is “destined eventually to pay-down debt” but says that in the first instance it will be “constituted to underpin additional lending” into Ireland.

This could be done through the European Investment Bank and could support further job creation measures, Howlin said. However, the Troika’s view would appear to indicate it is more keen to see debt serviced.

The Troika also notes in the draft EC report that precise projects which would benefit from the funds raised through privatisation have yet to be identified.

The government said last month that the sale of State assets will begin this year. It has previously said that parts of Bord Gais, ESB (now Electric Ireland) and Coillte will be sold off in the hope of raising around €3 billion.

May 2012: Half of proceeds from sale of State assets can be used for jobs – Howlin

Read: New insolvency regime may not help troubled mortgage holders – Troika

Read: Troika recommends cuts to specialist doctors’ salaries

In full: TheJournal.ie’s coverage on the leaked European documents >

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