June 20, 2017 / 6:42 PM / 2 months ago

Irish debate on debt targets has not fazed investors - funding head

LONDON, June 20 (Reuters) - Investors have not raised concerns about proposals by the new Irish prime minister to set looser debt reduction targets or scrap a rainy day fund planned to offset future economic shocks, the country's head of funding said on Tuesday.

New Prime Minister Leo Varadkar and newly appointed Finance Minister Paschal Donohoe have proposed the plans to free up spending for infrastructure projects in a country that remains one of the most indebted in the euro zone.

"Investors are asking about Brexit, they are asking about Irish economic growth… but we're not getting questions on the debt reduction target," Frank O'Connor told Reuters at the sidelines of a Euromoney event in London.

"There is a debate in Ireland about our infrastructure needs and how you address that in an environment where you've come through a period of elevated debt.

"But it is very early days for the new government, and it is not in the forefront of investors' minds. You will have to wait and see some policy before it will become a bigger topic."

Donohoe, who was promoted to the post of finance minister last week, told Reuters on Saturday that he would review the planned pace and start date of a contingency reserve or "rainy day fund" that is set to kick in from 2019.

He also backed Varadkar's plans to free up additional resources by setting a less ambitious debt reduction target than the one set last year, a policy that was questioned by the chief economist in Donohoe's department this week.

Ireland's economy has grown faster than any other in the European Union for the past three years but its capital spending remains among the lowest in the bloc after grinding to a near halt during a financial crisis that swelled the national debt. (Reporting by John Geddie, editing by Padraic Halpin)

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