IRELAND - Ireland should use much as €6bn of funds from the National Pension Reserve Fund (NPRF) for targeted infrastructure investments, the Irish Congress of Trade Unions (ICTU) has argued ahead of the unveiling of the 2011 Budget.
The ICTU also criticised the EU and said the fact funds accumulated in the NPRF were not taken into account when calculating the nation's debt levels was "perverse".
It has urged for a total of €4bn to be invested in infrastructure projects over the next two years, with an additional €2bn taken from Reserve Fund assets to set up a state-run bank with the aim of granting business loans to smaller and medium-sized companies.
In its pre-Budget report, the ICTU said: "Subject to the availability of suitable projects, a greater amount than €2bn could be expended in years one and two, thus frontloading investment to partially offset the effect of cuts elsewhere."
However, ICTU was keen to stress that the funds would only be used as an incentive for infrastructure growth, insisting that no project would receive more than half of their funds from assets taken from the NPRF as a way of guaranteeing third-party involvement.
Additionally, it said government influences must be kept to a minimum, with the state not granted a controlling influence on any investment, with an independent board instead supervising the direction taken by projects.
The ICTU criticised the fact the NPRF's funds - most recently valued at €24.5bn - were not included in the EU's deficit calculations.
"The EU criteria for meeting the terms of the Growth and Stability Pact are restrictive and can be perverse when it comes to sovereign wealth funds such as the NPRF in the attainment of the debt/GDP ratio criterion," it said, adding that this was because gross - rather than net national debt - was calculated.
The NPRF has posted annualised returns of 2% since its inception in 2001, but saw third-quarter losses of 2.5% due to one of its portfolios, which holds shares in Allied Irish Banks.
In other news, budget cuts could see the Irish state pension reduced if finance minister Brian Lenihan gets his way.
Proposals include a €7 cut to the €230-a-week state pension.
Ireland's 2011 Budget, which is set to be announced next month, is expected to see cuts of €6bn.
But one MP has said there is no justification for any such cuts.
And because the government only has a slim ruling majority, it needs the support of the Green Party to pass any reforms, with members of the junior partner already opposing any reductions.
No comments yet