- The investment performance goal is to exceed the average cost of government debt.

- No withdrawals shall be made from ISIF for budgetary purposes before 2025. Thereafter a dividendtype payment of up to 4 percent per annum may be paid to the exchequer.

- Investments shall not have a negative impact on the net borrowing of the general government of the state for any year.

ISIF measures the economic impact of its investment activity by applying the following three concepts:

- _Additionalit_ y, that is, the additional economic benefits to the gross value added /gross domestic product that are likely to arise as a result of an investment over and above what would have taken place anyway.

- _Displacement_ , or a reduction in the additionality generated by an investment when measured at the level of the overall economy, due to a reduction in such benefits elsewhere in the economy.

- _Deadweight,_ as when the economic benefits generated by an investment would have been achieved without such investment being made.

The ISIF seeks to allocate the majority of its capital (80 percent of its portfolio over time) to priority sectors that are likely to have high potential economic and employment impact, while also ensuring that all investments satisfy the fund’s commercial return objectives. The remaining capital is invested in assets that provide shortterm gains, accelerate market activity, or address instances of market dysfunction. Some of the sectors with the lowest levels of deadweight and displacement and highest levels of additionality would be those involved in exports, manufacturing, and internationally traded services.

Investment opportunities that lead to economic additionality and have low levels of displacement and deadweight are likely to result in a high economic impact at the overall economy level over the long term. Economic additionality can come in many forms, including increased output (turnover), profits (operating surplus), employment, net exports, and capital expenditure. The supply of enabling infrastructure also creates additionality in the future, by facilitating future competitiveness of the economy. Similarly, innovation and investment in research and development have long-term additionality that may not be immediately evident but is necessary for long-term sustainable economic growth.

_Sources:_ NTMA 2015a, 2015b.

# **6. Public Capital Multipliers**

Publicly available data suggest that SIFs generate a wide range of public capital multipliers. Box 6 contains a brief description of the methodology used for calculating public capital multipliers and its application to a select number of SIFs for which data are publicly available. Although multipliers do not reflect the ability of SIFs to operate efficiently, or the wider social and economic impacts of their investments, they do provide a useful indication of a fund’s ability to crowd in external capital. However, the following important caveats apply:

- _Definition._ Multipliers may refer to different dimensions (for example, different ratios, financing instruments, definitions of public and private capital, definitions of commitments or investment, and so on). For example, the external capital may come from other government institutions, or multilateral development institutions, instead of the private sector.

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