IRELAND - Ireland is planning introduce legislation that would allow it to use the €24.5bn National Pensions Reserve Fund (NPRF) to buy Irish government bonds next year.
In its National Recovery Plan 2011-2014, the beleaguered coalition government said such a step would be "very beneficial to the markets" and "demonstrate the government's willingness to ensure the funding of the Exchequer's needs".

"Accordingly," it added, "legislation will be brought forward to enable the National Treasury Management Agency (NTMA) to deploy the resources of the NPRF to support the Exchequer's funding programme to the extent required."

The government said Ireland had developed significant international demand for its bonds and debt instruments over the years and this international demand would remain an "important source of funding as Ireland expands the investor base for its bonds by marketing to new investors".

However, it pointed out that Irish pension funds, while holding significant assets under management, hold relatively little Irish debt. Overseas investors currently hold approximately 85% of Irish bonds.

The government said the proposed framework revision - initially pitched by representatives within the pensions industry - would benefit both current and future pensioners as a "result of the improvement in the position of their pension funds".

It also said there was demand in the Irish market, from both pension schemes and insurers, for a bond linked to the consumer price index and that the NTMA aimed to issue such a bond some time in 2011.

Separately, the government said it would also aim to identify public infrastructure investments for the NPRF. In May 2010, the NPRF Commission agreed to allocate 5% of the NPRF Discretionary portfolio to infrastructure investment, an increase from the initial strategic allocation of 2%.

The NPRF has also agreed in principle to provide as much as €550m for a water investment programme.