Tuesday 26 September 2017

Battle looms over state assets

Coalition must strike a deal with IMF on proceeds of sales

Fionnan Sheahan Political Editor

THE Government will have to strike a tough deal with the IMF-EU if it is to keep some of the proceeds of the sell-off of the State's crown jewels.

The IMF shifted the goalposts on state asset sales this week, saying it wanted €5bn raised as part of the bailout deal -- more than double the Fine Gael-Labour Party coalition's own target of €2bn.

But the Government also wants to reinvest some of the proceeds of privatisation in broadband, energy and water infrastructure.

Government officials say a deal will have to be negotiated when the IMF-EU delegation returns in October.

Ministers will have to convince the Troika of the value of pumping money back into infrastructure, rather than simply using the proceeds to reduce the budget deficit.

Analysis

"The Government isn't committed to more than €2bn but realises this will be a negotiation. The IMF will want to see real analysis on the return for the investment. They'll be saying 'show us the numbers'," a government source said.

In a report issued in Washington, the IMF said the Government should raise around €5bn from asset sales.

The bailout deal doesn't mention a specific figure, just that the Government will raise as much as possible from sell-offs.

But the Coalition would be forced to sell off a raft of state assets to meet the €5bn target.

Government sources played down the prospect of the IMF really pushing the €5bn target, describing the demand as "posturing".

"The Government will be looking to try to make a case for investing in infrastructure. The Government will provide an economic assessment and make a very good case that we will see an economic value from the investment," a source said.

The ESB and Bord Gais are top of the list of options of state assets to be privatised. But the prospect of the Government's remaining stake in Aer Lingus being sold off is being played down.

Owing to the restructuring and improving financial position of the airline, there is an argument that it is too early to sell off the remaining 25pc -- estimated to be worth €110m.

Instead, the Government may wait to get a better price.

"The time wouldn't be opportune to sell off Aer Lingus. You would wait until a period when the airline is in a healthier state," a source said.

The Government will ask its in-house financial experts in the coming weeks to estimate how much can be made from the sell-off of the state assets.

The State's money managers, the National Treasury Management Agency (NTMA), will be appointed in the coming weeks, possibly at the next meeting of the Government, to assess the value of each asset on a shortlist.

The NTMA will have a new unit set up, called New Era.

New Era was Fine Gael's big idea to set up a semi-state company to invest in broadband, energy and water infrastructure.

The first task of New Era will be to assess the value of the individual assets.

Bailout praise, Page 30

Irish Independent

Editor's Choice

Also in Irish News