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High debt pile a low risk to economy, says NTMA chief

While Ireland’s stock of sovereign debt is still high, the risk it presents to the country’s economic future is now low due to a lower interest bill, better government finances and higher credit ratings.

This is according to the chief executive of the National Treasury Management Agency. 

“I would caution that we are still not completely safe – still not at base camp – but if we look carefully we can see it in the distance,” NTMA chief executive Conor O’Kelly said.

He made his comments at the Ireland Strategic Investment Fund’s market engagement event in Dublin today.

Mr O’Kelly also advised the Government that there was merit to deciding on a pathway to reduce the state’s shareholdings in Irish banks.

He cautioned that waiting for share prices to get back to where the state sold them initially risked introducing “ownership bias”.

Meanwhile, the ISIF – which is managed by the NTMA – said it has generated more than €1 billion in investment gains since its inception in December 2014, bringing the total value of the Fund to €8.1 billion.

In an update on its 2019 investment performance, the ISIF said it generated an investment return of 5.2% in 2019, an increase in value of €457m. 

Its Global Portfolio generated a return of 5.5%, while its Irish Portfolio delivered a return of 5.3%.

The ISIF said it has committed a total of €4.6 billion to Irish investments, in line with its “double bottom line” mandate to invest on a commercial basis to support economic activity and employment in Ireland.

This investment has acted as a catalyst to attract co-investment totalling €8.4 billion from private sector and third-party investors in ISIF-backed projects, it stated.

The Fund said this brings total investment commitments in Ireland arising from its investments to €13 billion.

The Fund, guided by the objectives of Project Ireland 2040, is targeting its future investments in five priority areas of key importance to the Irish economy – regional development, housing, indigenous businesses, climate change and sectors adversely affected by Brexit.

Total ISIF commitments for last year included investment of €59m on regional development, €159m
on housing, €186m on indigenous businesses and €34m on climate change investments.

Eugene O’Callaghan, the ISIF’s director, said today’s figures show the Fund is delivering on its “double bottom line” mandate to achieve a commercial return and support economic activity and employment in Ireland. 

“Our strategy has been successful in creating significant value for the State and in helping to address some of the key challenges facing the economy,” Mr O’Callaghan said.

He said that central to the Fund’s investment strategy is a focus on sustainability, adding that the ISIF as a long-term capital provider is a sustainable and long-term source of capital for Irish businesses. 

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