(Bloomberg) -- Irish Finance Minister Jack Chambers signed the commencement order to set up the country’s new sovereign wealth fund with the potential to grow to more than €100 billion ($108 billion).
The goal is to transfer one of Europe’s rare budget surpluses into a fund that can protect the economy from future downturns and costs, including those related to an aging population and climate change.
The fund may grow to more than €100 billion over the next 11 years, based on annual contributions, gross domestic product growth and potential return from investments, according to estimates from the Department of Finance. The Future Ireland Fund will support state spending from 2041 onwards, the finance ministry said in an emailed statement on Thursday.
The fund will get a transfer of 0.8% of GDP annually, or about €4 billion this year, from 2024 until 2035, Chambers said at a press conference in Dublin on Thursday. A tranche of money will also be transferred from the National Reserve Fund, which will then be dissolved.
A second fund to support infrastructure and climate-related projects will get contributions of €2 billion per year until 2030.
The funds will use a portion of the surge in corporate tax revenue from companies with key European bases in Ireland, such as Apple Inc., Microsoft Corp. and Pfizer Inc.
“Corporation tax receipts last year reached €24 billion and are continuing their strong trajectory again this year, and in establishing these two new funds we are taking action now to secure public finances for the long term,” Chambers said.
Ireland has forecast a budget surplus of €8.6 billion in 2024 and is expected to reach €9.7 billion in 2025, boosted by corporate tax, the finance ministry said earlier this year.
Both Chambers and Minister for Public Expenditure Paschal Donohoe have warned repeatedly of the volatile nature of the corporate tax receipts that they say are “windfall” in nature, underpinning the motivation to establish the two new funds.
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