New State Fund Coming to Ireland

Posted on 07/13/2023

Based on the success of the €9.5 billion Ireland Strategic Investment Fund (ISIF), managed and controlled by the National Treasury Management Agency, Finance Minister Michael McGrath has suggested the creation of a new state fund. Treasury and finance officials are pleased with ISIF’s 2.9% return per year since inception. This has resulted in €2 billion in extra income for the country.

McGrath wrote in a just-released report: “It is very important to note the major contributions that ISIF has played since its inception, deploying capital effectively across a range of priority investment themes while maintaining its double bottom mandate of delivering a strong economic impact and a commercial return.”

Now McGrath wants a fund to keep the government afloat in case of an economic shock. Approximate figures for the fund and other details are not yet known, but the matter will be discussed prior to the fall budget meeting, and money needed to capitalize the fund could tarry until late 2024 to early 2025.

This represents the latest stage in the growth of the National Treasury Management Agency. Per the Agency: “Over the past 30 years, the NTMA has grown from a single function as a sovereign borrower to a manager of a wide-ranging portfolio of state assets and liabilities. The many additional mandates entrusted to the Agency by government over that period is a testament to the agility, professionalism and commitment of our people, and to the scalable, flexible operational platform we have put in place.”

Ireland has managed to borrow at a long-term rate of 1.1 to 1.5% until recently. Current yields for long-term debt have risen to an average of 3.2% according to the government’s recent figures.

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