Report on the need for Financial Instruments to be completed in December

A Financial Instrument (FI) may be introduced in Ireland’s Rural Development Programme (RDP) as early as next year. The Minister for agriculture, Michael Creed, said he is “actively considering” its introduction.

“They can offer an alternative or complementary form of support to traditional grant based funding,” Creed said in response to a parliamentary question this week. “They can take the form of equity or quasi-equity investments, loans or guarantees, and may, where appropriate, be combined with grants.”

In order to include a financial instrument as a measure in the rural development plan, an ex ante evaluation is necessary which can take between three months to a year to complete. Fianna Fail spokesperson for agriculture, Charlie McConalogue, asked what the progress to date is on that evaluation and what the timeframe is for it to be completed.

Creed said that following a tendering process Indecon was awarded the contract at the end of August to conduct the ex ante evaluation which will identify the market need for such a measure. It is expected to be completed by the end of December this year.

“Once the report is received it will be carefully considered and a decision can then be made on whether or not to implement a FI,” Creed said. “If a decision is made to proceed with FIs then an agreement must be reached between the Department and any other potential stakeholders or financial institutions on a clear investment strategy that is developed from the gaps, if any, identified in the ex-ante assessment.”

Funding for such FIs is expected to come from the existing European Agricultural Fund for Rural Development and European Martime and Fisheries Fund allocations.

Process

In order to introduce a Financial Instrument under the RDP there are three steps to be completed.

1. An ex ante assessment to asses the demand for the measure

2. Investment strategy – an agreement must be reached by the Department and any other stakeholders/financial institutions on a clear investment strategy that is developed from the gaps identified in step 1.

3. Amendment - following the development of an investment strategy, an appropriate amendment would have to be made to the Operational Programme(s).

This measure had been explored under the previous government but the ex ante assessment had not started before the Dail dissolved in February this year.