Independent Media Centre Ireland     http://www.indymedia.ie
Search words: tranche

Proceeds of AIB shares should be for public investment – TASC economist

category national | economics and finance | press release author Friday June 02, 2017 18:34author by 1 of indy - Think-tank for Action on Social Change

Press Release - TASC - 30th May 2017

reland must assert its sovereignty and invest the proceeds of the AIB shares in public infrastructure, according to leading economist, Paul Sweeney of TASC.

The main reason for investing this capital in Ireland, Mr Sweeney said, is that it generates bigger returns than the savings on the interest on the national debt. Furthermore, the extraordinarily low level of public investment is manifested in the housing crisis and hospital overcrowding.

The government has already received €6.2 billion from AIB from capital reorganisation, all of which has been used to repay the national debt. “It is now time that the next tranche of capital from AIB is used to invest in capital infrastructure,” said Mr Sweeney.

TASC first made the recommendation that the capital from the first share offer should be invested rather than used to repay the debt in a major investment report, “A Time for Ambition”, published in December 2015. (See https://www.tasc.ie/publications/a-time-for-ambition-en...h-in/ )

The report pointed out that in recent years public investment in Ireland fell to the lowest level since records began. The level of investment was so low one year that it did not even cover depreciation.

“This is very bad economics,” stated Mr Sweeney. “Most economists and international agencies like the IMF agree that public investment in infrastructure can repay substantially more in real returns to governments than the cost of interest. That is one reason for more public investment, with others being that we will have the use of assets and that it will increase employment, particularly in construction. Also such low public investment is damaging future economic development.”

Last month the government borrowed €500 million, the interest was minus 0.42% and this was almost three times oversubscribed. The average interest rate on all the debt was 2.3% last year – and it is lower today.

Mr Sweeney also was critical of the “bogeyman” who asserted that that the EU is stopping the government from using some of the AIB proceeds to invest in Ireland.

“It suits the suits who want to repay debt to say this. Ideological though the Commission is, it cannot really stop a sovereign government from investing its own capital in its own country. Furthermore, the EU has clarified the rules ( http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELE...R1185 ) on the Stability and Growth Pact in which indicates a more relaxed approach especially for an economy which is performing well like Ireland.

“In the longer term, the government should also retain a decisive shareholding in AIB, one of Ireland’s leading retail banks. Banks are too important to be left to bankers to run or ruin,” Mr Sweeney concluded.

Related Link: https://www.tasc.ie/news/2017/05/30/proceeds-of-aib-shares-should-be-for-public-invest/

http://www.indymedia.ie/article/106174?search_text=tranche

Indymedia Ireland is a media collective. We are independent volunteer citizen journalists producing and distributing the authentic voices of the people. Indymedia Ireland is an open news project where anyone can post their own news, comment, videos or photos about Ireland or related matters.