#1pwc Ireland: Fiscal strength, full employment NTMA Investor Presentation June 2023 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency#2Index Summary - Page 3 Macro - Page 8 Fiscal - Page 25 NTMA Funding - Page 32 ESG Sustainability - Page 43 Structure of Irish economy - Page 54 Property & banks - Page 63 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 2#3Summary Irish economic resilience but risk from external environment clear Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ B#4y-o-y% Economic growth expected in 2023 Energy crisis/inflation/monetary policy to slow growth versus 2022 MDD* gives better picture of growth: 2-3% forecasted for 2023 after 8.2% in 2022 Unemployment is below 4% - labour market at full employment Value added from ICT & pharma has given Ireland resilience 30 35 25 30 20 25 15 10 20 15 10 -5 -10 -15 5 I 0 T 2005 2010 2015 2020 2005 2010 2015 2020 GDP Domestic Demand - Unemployment rate Source: CSO EUR, billion 250 200 150 100 50 0 I 2000 2005 2010 2015 2020 GVA: Domestic sectors GVA: Multinational dominated sectors Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency * Modified Domestic demand series accounts for multinational activity (technically modified final domestic demand (excl. inventories)) Note: Unemployment rate series shown uses the Covid adjusted unemployment rate between March 2020 and Feb 2022 and the standard unemployment rate elsewhere. Source: CSO#5Government surplus expected again in 2023 Debt metrics all improved again last year Forecasted 2023 GG surplus (3.5%) despite Debt metrics set to improve this year again slowing growth Debt to GNI* expected to fall rapidly 10 5 d-5 -10 175 Debt-to-GNI* (78.8% 2023f; 95% in 2019) 150 125 Debt-to-GG Revenue (181% 2023f; 232% in 2019) 100 do 75 50 25 0₁ -15 -20 I I I | I 1995 2000 2005 2010 2015 2020 2025 GGB (% GNI*) Primary Balance (% GNI*) Source: CSO, Irish Department of Finance forecasts Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Average interest rate (1.5% 2023f, from 2.2% in 2019) Debt-to-GDP^ (40.5% 2023f, from 57% in 2019) ^ Debt to GDP is not an appropriate metric to use for Ireland | I 1995 2000 2005 2010 2015 2020 2025 Debt-to-GNI* Debt-to-GDP Source: CSO, Irish Department of Finance forecasts 5#6Medium term economic challenges External environment is challenging - global slowdown and inflation Growth Economic strength in early 2023 but tight monetary policy to impact growth in future quarters. Labour market strength gives comfort. MDD growth of 2-3% expected for 2023 Fiscal Large surplus (3.5% of GNI*) expected for 2023 via exceptional CT receipts. New sovereign wealth fund to be established will house longer-term savings and partially alleviate future fiscal challenges. Inflation High inflation in Ireland similar to other European economies. Tighter policy will feed through to slower growth but Ireland starting from high base Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency CO 6#72023 funding range between €7bn to €11bn NTMA funded €6bn so far this year, two-thirds of midpoint of range Cash Fiscal surplus alongside NTMA's strategy of prefunding means Ireland has a strong cash position. This affords the NTMA a large degree of flexibility around issuance. >10 years Weighted average maturity of debt one of longest in Europe. NTMA issuance since 2022 of €13bn at WAM of 16.9 years and average interest rate of 2.04%. AA Ireland rated in the AA category with all major rating agencies. S&P upgraded to AA and Moody's upgraded to Aa3 in 2023. Fitch and DBRS upgraded their rating to AA space in 2022. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 7#8Macro Economic strength in early 2023 but credit tightening Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 8#9y-o-y chg Irish economy performed well in early 2023 Modified domestic demand (MDD) and employment growth show resilience in Irish economy MDD up 2.7% q-o-q in Q1 2023 and activity still growing albeit at a slower rate than in 2022 Irish measures of activity are mixed, pointing to slowing growth for the Irish economy 20 15 10 -5 -10 -15 2018 I I I I 2019 2020 2021 2022 2022 vs. Q1 2023 2021 y-on-y Q1 2023 q-on-q GDP 12.0 -0.2 -4.6 MDD Consumption 8.2 5.5 2.7 6.6 6.4 1.7 Gov't Spending 0.7 -2.4 -3.5 Mod Investment 19.8 11.2 11.1 Employee Compensation 11.3 5.9 -0.3 MNE GVA 19.4 0.0 -15.7 I 2023 Domestic GVA 7.2 4.4 2.7 Employment 6.6 4.1 1.9 % change from indicated period Source: CSO, Eurostat | Personal Consumption Modified Investment Government Spending - Modified Domestic Demand Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Note: MDD for Ireland is modified for multinational activity by Ireland's Central Statistics Office (CSO). MDD = Consumption + Government (current) spending + Modified Investment. Seasonal adjustment mean contributions do not always add up to MDD growth rate. 9#10Ireland expected to grow moderately in 2023 Real growth set to persist but headwinds will hamper Growth expected to be slower than the average growth rate in pre-Covid expansion Softer growth* projected for 2023 but expected to be comparatively stronger than major trading partners 10.0 2.5 7.5 2.0 5.0 2.5 1.5 0.0 1.0 -2.5 -5.0 0.5 -7.5 0.0 -10.0 -12.5 -0.5 T | 2000 2005 2010 2015 2020 2025 Real MDD growth Source: CSO I 2023 2024 Ireland I United States Euro Area 20 United Kingdom Source: DG ECFIN, IMF Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Note: MDD for Ireland is modified for multinational activity by Ireland's Central Statistics Office (CSO). MDD = Consumption + Government (current) spending + Modified Investment. *For Ireland we use MDD growth. 10 10#11High frequency data somewhat mixed Recent data mostly positive but not as strong as early 2022 Retail sales (ex motor) 0.2 0.0 2/22 3/22 4/22 5/22 6/22 7/22 8/22 9/22 10/22 11/22 12/22 1/23 2/23 3/23 4/23 5/23 -1.3 0.1 0.6 -1.5 0.0 -0.3 0.6 0.6 0.4 0.5 -0.5 0.2 0.3 n/a Unemployment rate 4.7 5.0 4.6 4.2 4.2 4.3 4.4 4.4 4.5 4.5 4.4 4.3 4.1 4.0 3.9 3.8 Payroll employees 1.3 1.4 1.3 0.8 0.1 -0.4 -0.4 -0.1 0.2 0.5 0.6 0.7 0.7 0.5 n/a n/a Headline HICP 0.3 0.9 1.3 1.4 1.1 0.9 0.6 0.2 0.6 0.6 0.5 -0.4 0.1 0.5 0.9 0.5 Core HICP 0.3 0.3 1.0 0.8 0.8 0.6 0.6 0.4 0.2 0.1 0.2 -0.1 0.4 0.6 1.1 n/a House prices 0.8 0.7 0.5 0.5 0.7 0.9 1.0 0.9 0.6 0.3 0.2 0.0 -0.2 -0.5 n/a n/a Consumer confidence 77.0 67.0 57.7 55.5 57.7 53.7 53.4 42.1 46.1 45.3 48.7 55.2 55.6 53.9 59.2 62.4 Composite PMI 59.1 61.0 59.6 57.5 52.8 52.9 51.0 52.2 52.1 48.8 50.5 52.0 54.5 52.8 53.5 51.9 Income Tax 2.1 2.1 2.7 2.4 2.4 2.5 2.4 2.2 2.5 4.4 2.5 2.8 2.2 2.3 3.1 2.6 Source: CSO, Eurostat, DG ECFIN, SPDJI, Irish Department of Finance Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Note: Retail sales, payroll employees, HICP and house prices are calculated as m-o-m % 3mma. Income tax is the monthly tax revenue; November includes income tax for those who are self-employed. 11#12Labour market strength remains Unemployment rate well below pre-pandemic levels Unemployment rate at 3.8% in May - a record low in recent 35 30 25 20 do % 15 10 decades No. of Persons Employment growth up 12% on pre-pandemic, growth rate slowing however 130 110 90 70 50 Approx. 2.3k job losses in tech expected vs 42k job gains in tech since Q4 2019 I Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2020 2022 0 2019 2021 2023 2006 2008 2010 2012 2014 2016 2018 2020 2022 ICT - Unemployment rate Industry (incl. Pharma) Construction Accomm & Food - Total Source: CSO Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Note: Unemployment rate series shown uses the Covid adjusted unemployment rate between March 2020 and Feb 2022 and the standard unemployment rate elsewhere. 12#13Nearly all sectors back above 2019 levels There are clear signs of a tight labour market Job gains broad-based, with female employment up 12.9% compared to pre-pandemic, vs 8.7% for males Health Industry ICT Prof, sci, tech Public admin Wholesale/retail Education Fin, ins, RE Construction Transpo & storage Other Admin serv Hotel & rest Ag, fish, forestry Q1 2023 vs Q4 2019 0 No. of Persons 10000 20000 30000 40000 50000 60000 321012 Labour force has grown 10% since 2019 but indicators* suggest a very tight labour market -1 -2 -3 2000 Slack Tightness 2005 2010 I 2015 2020 - Employment to Population Ratio, 25-54 Years (inverted) Unemployment Rate Job Vacancies to Unemployment (inverted) - Vacancy Rate (inverted) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Male Female Source: CSO Source: CSO *All four indicators are standardised and measure the historical variation from "normal". The results can be read similar to a Z-score. 13#14Wages are increasing, real wages still negative Earnings have increased but less than anticipated given high inflation and tight labour market Outside public pay deal*, private sector earnings growth is not spirally upwards yet Real earnings growth negative since late 2021 do 12 10 8 9 4 10 ir ŵ o w G∞ 5 -3 do 2 -5 -8 0, I I I I 2018 2019 2020 2021 2022 2023 All Sectors Public - Private 2010 2012 2014 2016 2018 2020 2022 ICPI-adjusted average hourly earnings growth Source: CSO Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency * Q4 2022 average hourly earnings distorted by backdated aspect of public sector pay deal 14#15Index, Q4 2019 = 100 Real spending growing better than expected But inflation is now clearly eating into real consumption High-inflation environment hitting real consumption as divergence between real and nominal spending widens 120 110 100 888 y-o-y %, 3mma Higher frequency data show normalisation in nominal spending* growth as well as negative impact of inflation 40 30 20 10 0 90 -10 80 -20 -30 2020 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2019 2021 2022 2023 I 2016 2017 2018 2019 2020 2021 2022 Nominal Personal Consumption Real Personal Consumption Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO Nominal card spending - -Inflation-adjusted card spending Source: Central Bank of Ireland, CSO 15 * CBI spending data is nominal data and not seasonally adjusted. RHS chart shows card data minus annual CPI inflation. Growth rate of card spending is influenced by increased digitalisation of spending habits over last decade.#16% of GNI* Households balance sheet strength Debt levels much lower coming into pandemic + Covid savings Private sector balance sheets are not over leveraged - healthy position will insulate against tighter monetary policy 157 Gross HH saving rates have jumped in Ireland more than in most countries due to forced savings/income supports 35 175 150 135 129 110 125 100 75 71 64 53 44 83 50 51 35 14 25 0 T Household debt SME debt Public debt 2003 2008 2013 12022 Source: Central Bank of Ireland, Eurostat, CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Savings % of disposable income, 4Q MA 30 25 20 15 10 50 | | I 2005 2010 2015 2020 - Ireland Euro Area 19 - - United Kingdom Source: CSO, CSO, ONS, Eurostat Note: Gross Savings as calculated by the CSO has tended to be a volatile series, some caution is warranted when interpreting 16 this data#17Flash harmonised inflation at 5.4% Energy and pandemic concerns easing but core inflation also elevated Energy prices driving headline inflation but core also elevated; excluding energy and food, prices up 5.2% y-o-y 10 8 Goods inflation easing on back of energy prices - services inflation could be stickier 10 6 % do N 0 24 -2 8 6 do 4 20 I I I I I I 2015 2016 2017 2018 2019 2020 2021 2022 2023 -4 -2 I T 2005 2010 2015 2020 HICP - Core HICP Source: CSO, Eurostat Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Note: RHS chart plots CPI inflation. Goods Services - All items Source: CSO 17#18Inflationary pressure broad across index Re-opening and energy impacts evident in inflation index Biggest pick-up in inflation concentrated in energy and Covid- hit sectors HICP inflation by COICOP divisions Inflation is broad: >50% of products in CPI basket are seeing >5% annual inflation All Items Food & Non-Alcohol Alcohol & Tobacco y-o-y % -10 -5 0 5 10 15 20 Clothes & Footwear Housing & Utilities Furnishings, & HH Equip Health Transport Communication Recreation & Culture Education Restaurants & Hotels C 25 25 20 Misc Goods & Services ▲ 1 year ago 3 year average May 2023 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 100 30 90 30 80 70 60 do % 50 40 30 20 10 0 Source: CSO 2015 2016 2017 2018 2019 2020 2021 2022 2023 <0% 0-2% 2-3% 3-5% >=5% Note: RHS shows distribution of annual inflation rates across all CPI items (unweighted). Source: CSO 18#19Sustained inflation an obvious risk Phillips curve historically has held in Ireland Inflation expectations picking up for consumers and businesses, industry dropping back Philips curve has held in Ireland in recent past and unemployment is below 5% 80 60 40 do 20 0 -20 I I I 2014 2016 2018 2020 2022 10 9 4 of 2 0 2 00 Nominal COE growth per head* 0 << 6 - Consumer expectations, Ihs Industry expectations, lhs Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Services expectations, lhs - Headline inflation, rhs Source: DG ECFIN, Eurostat * Excludes agriculture incomes 2 2023f Covid outliers -2 I I I I I I I I 2 4 6 8 10 12 14 16 18 20 22 Unemployment rate Source: CSO, Eurostat 19#20Monetary tightening starting to bite Euro Area lending slowed around turn of the year, Irish impact more on rates EA-wide loans to euro area residents (households and businesses) started to slow even before market turmoil After years of higher priced mortgages, Irish rates are in line with EA average 12.5 4.0 350 3.5 10.0 3.0 7.5 250 5.0 150 200 2.5 50 EUR, billion Percent 2.5 2.0 1.5 0.0 1.0 -50 -2.5 0.5 -5.0 -150 0.0 I | T | I I 2000 2005 2010 2015 2020 S JM S 2017 2018 MSJ MS JM SJ MS 2019 2020 2021 J M 2022 2023 - Outstanding Loans, y-o-y growth, lhs -Transaction flows, rolling 3 months, rhs -Ireland Euro Area Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: ECB Source: ECB 20 20#21Banks passing on rate hikes to businesses Rates on new lending to corporates moving faster than mortgage rates Lending rates to NFCs among highest in Euro Area and have been increasing (grey equals min/max range) Lending volume to SMEs flat but rates have jumped in latest data 7 8465 Percent 4 3 2 1 2008 2010 2012 2014 2016 2018 2020 2022 0 | I | I - Ireland - Euro Area Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency EUR, billion 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0.00 2016 Source: ECB 2018 5.25 - 5.00 - 4.75 4.50 4.25 Percent 4.00 - 3.75 3.50 2020 2022 Gross new lending to SMEs, Ihs Interest rates, gross new lending to SMEs, rhs Source: Central Bank of Ireland 21 21#22Investment strong, partly due to one-off factors Increases due to computer hardware, production facilities/data centres & new dwellings Machinery and Equipment had outsized increase in Q2 2022 40 Net imports of specialised machinery for particular industries saw huge bump in Q2 2022, led to jump in mod. investment 2.0 di 10 0 HN WA 30 20 1.8 1.5 -10 EUR, billion 1.3 1.0 0.8 -20 0.5 -30 0.3 -40 0.0 I 2000 2005 2010 2015 2020 2014 2016 2018 2020 2022 Modified Investment (y-o-y) Specialised machinery net imports Source: CSO Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Note: Ireland metric is modified investment, which strips out multinational activity. For some series, there are no figures available as data is suppressed for confidentiality reasons. 22 22#23External environment in 2023 Recent data better than expected but still mixed and leaning towards global slowdown Ireland price taker on Oil/Gas: significant cost beginning to recede in early 2023 2022 2023 EA Monetary Policy Purchases ended; Rate normalisation Rate normalisation + start of QT EU Fiscal Policy US Monetary Policy US growth Energy prices Expansionary Sharp increase in rates 4.0 Expansionary Policy rate elevated but may see cuts year-end Decelerating growth EUR, billion € 3.0 $2.0 Low growth 1.0 Severe crisis Prices pressure easing 0.0 Decelerating growth Low growth at best UK growth Euro Growth Global Inflation Slow growth Elevated in 2022 Financial Stability Little concern Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency I Low growth at best Core measures elevated Unknown but negative at margin 2006 2008 2010 2012 2014 2016 2018 2020 2022 Gas imports (3 mths rolling) Petroleum imports (3 mths rolling) - Total imports (3 mths rolling) Source: CSO 23 23#24OECD's BEPS process may impact FDI offering Pillar Two due for EU implementation in 2024, Pillar One still to be ironed out Pillar One: proposal to re-allocate taxing rights on non- routine profits ▸ Over 130 countries have signed on for the BEPS 2.0 two- pillar set of reforms. The first pillar focuses on proposals that would re-allocate some taxing rights between jurisdictions where companies reside and the markets where user/consumers are based. ▸ Under such a proposal, a proportion of profits would be re- allocated from small countries to large countries. Pillar 1 will reduce Ireland's corporation tax base. Some estimates place the hit at c. €2bn per annum by the middle of the decade. Ireland has always been fully supportive of Pillar One despite the implied cost to the Exchequer. Pillar Two: 15% minimum effective global tax rate ▸ Countries will introduce a minimum effective tax rate with the aim of reducing incentives to shift profits. ▸ Where income is not taxed to the minimum level, there will be a 'top-up' to achieve the minimum rate of tax. ▸ The EU have agreed a directive to implement the 15% rate in 2024 ▸ The minimum rate is greater than the 12.5% rate that Ireland levies and thus some of Ireland's comparative advantage in attracting FDI will be lost. However Ireland's rate will remain one of the lowest in EU. ▸ Ireland can lean on other positives; educated and young workforce, English speaking, EU access, and ease of doing business Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 24 24#25Fiscal Large surplus in 2023 expected on back of continued revenue growth Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 25#26Ireland's fiscal strength apparent Robust revenues mean surplus just two years after large Covid-induced deficit General Government surplus expected in 2023, c. €10bn, or 3.5% of GNI* Revenues starting strong in 2023; income tax and VAT important but corporate tax up over 20% 10 10 22.5 20.0 5 17.5 0 15.0 12.5 Jo -5 di 10.0 -10 7.5 2022e -15 GGB % of GNI* 3% 5.0 2.5 -20 | I I T 0.0 1995 2000 2005 2010 2015 2020 2025 2023 vs 2022 YTD GGB (% GNI*) == Primary Balance (% GNI*) Income Tax IVAT Excise Corporation Source: CSO, Irish Department of Finance forecasts Source: Irish Department of Finance Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency LHS chart: GG and primary balance numbers used exclude banking recapitalisations during GFC 26#27Surplus compares well to others Recovery in fiscal position evident, question arises to how to manage such surpluses 3 1 -1 -3 -5 -7 2023 GG Balance (forecast, % of GDP or GNI*): Ireland currently at 3.5% of GNI* United States United Kingdom France Belgium Slovakia Malta Estonia Spain Lithuania Latvia Slovenia Italy Germany Luxembourg Austria Finland Greece Netherlands Portugal Sweden Source: IMF, Irish Department of Finance 27 27 Note: Irish forecast based on Department of Finance Stability Programme Update 2023 forecasts. Forecasts for other countries taken from IMF World Economic Outlook April 2023 Forecasts Denmark Cyprus Ireland Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency#28Corporate tax receipts growing strongly Government planning to place excess receipts in long term sovereign fund Corporation tax at €22.6bn in 2022, nearly double 2020 level - the growth suggests receipts are transitory € billion, cumulative 25 20 15 45 10 5 0₁ Underlying GGB suggests Ireland would be in small deficit in 2023 if excess Corporate Tax excluded (-0.6% of GNI*) 7.5 2.5 -2.5 do -7.5 -12.5 I Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -17.5 T I | 1995 2000 2005 2010 2015 2020 2025 2016 - 2017 2018- 2019▪ - 2020 2022 2021 2023 GGB (% GNI*) Underlying GGB (%GNI*) Source: Irish Department of Finance Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO, Irish Department of Finance forecasts 28 828 Note: The Department of Finance's underlying general government balance is the GGB excluding the Government's estimated windfall corporation tax receipts (windfall estimated at €10.8bn for 2022 and €11.8bn for 2023).#29Multinationals at core of CT payments Manufacturing the driver in last year's CT surge CT paid (€m) 2022 vs. 2021 Manufacturing 10,078* +5,660 ICT 4,184 +922 Fin and Insurance 2,698 +334 15 Wholesale, retail 2,292 -49 10 10 Admin and Support 1,199 -86 5 Prof, Sci, Tech 660 +4 Construction 469 +105 Mining, Quarry, Utilities Other 304 +127 760 +304 Top 10 driving recent CT surge - likely that even top 3 companies pay c. 30% of all CT receipts (Fiscal Council analysis) € billions 25 20 20 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Revenue Report, Macrobond -Top 10 Companies CT receipts Other CT receipts *€5,536m chemical and pharma manufacture (+ €2,645m on 2021), €3,788m ICT manufacture (+ €2,855m on 2021) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 29 29#30GG debt to GNI* falls to c. 83% in 2022 Debt to GNI* expected to fall as growth and fiscal position both help Debt to GNI* falling into 70s in 2023; low debt to GDP means proposed EU fiscal rules won't impact Ireland in short term Net debt position is back below EA average, completing a more than decade long journey 175 130 150 110 125 90 100 70 do 75 50 30 50 10 25 I I I I 2000 2005 2010 2015 2020 0 1995 2000 2005 2010 2015 2020 2025 Debt-to-GNI* Debt-to-GDP Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO, Irish Department of Finance forecasts -Ireland, Net GG Debt % of GNI* Euro Area 19, Net GG Debt % of GDP Source: Eurostat, CSO 30 30#31Alternative Debt Metrics Need to assess other metrics apart from debt to GDP when analysing debt sustainability 2022 GG debt to GDP % GG debt to GG revenue % GG interest to GG revenue % Greece Italy 171 341 4.8 144 296 8.9 Portugal 114 257 4.4 Spain 113 263 5.5 France 112 209 3.5 Belgium 105 212 3.1 UK 101 246 10.6 EA 19 93 198 3.6 Cyprus 87 206 3.6 EU 27 85.4 184 3.5 Ireland 45 (83 GNI*) 195 2.8 Austria 78 158 1.9 Slovenia 70 165 2.5 Germany 66 141 1.4 Slovakia 58 144 2.6 Netherlands 51 115 1.2 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta Source: DG ECFIN, Irish Department of Finance National Treasury Management Agency 31#32NTMA Funding Funding range of €7bn to €11bn in 2023 Continued flexibility in strategy due to cash balances and long average life Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 32#332023 funding range between €7bn to €11bn NTMA funded €6bn so far this year, two-thirds of midpoint of range Cash Fiscal surplus alongside NTMA's strategy of prefunding means Ireland has a strong cash position. This affords the NTMA a large degree of flexibility around issuance. >10 years Weighted average maturity of debt one of longest in Europe. NTMA issuance since 2022 of €13bn at WAM of 16.9 years and average interest rate of 2.04%. AA Ireland rated in the AA category with all major rating agencies. S&P upgraded to AA and Moody's upgraded to Aa3 in 2023. Fitch and DBRS upgraded their rating to AA space in 2022. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 33 33#34High level of flexibility in NTMA issuance plans Helped by smoother maturity profile 23 20 222 billion 18 15 13 10 8 5 3 0 T 2054+ 2051-53 2046-50 2041-45 2036-40 2035 2034 Other (incl. SURE) ili 2030 2029 2028 2027 2026 2025 2024 Bond (fixed) EFSM EFSF I Bond (floating rate) Green 2031 2032 2033 2023 NTMA redeemed at maturity €7bn in IGBS in March 2023 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: NTMA 34 ==#35Lower supply expected in coming years Ireland has low redemptions compared to rest of Europe 25 20 15 10 5 Current borrowing requirements suggest NTMA issuance won't match recent past (€bns) Ireland's refinancing risk is low - only a third of debt is set to mature in the next five years Average Issuance 2022 Issuance 2017-21 2023 funding range (€7-11bn) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Percent ON WAGON 10 0₁ 40 30 20 70 60 50 EFSF ESM DE T EA IT FR I Refinancing Risk 5Y BE EU* PT Source: ESDM Refinancing rate defined as debt maturing within five years divided by total debt outstanding. * EU data is EU as an issuer 35 35#36Borrowing costs anchored Ultra-low rate era over but Ireland used the period well NTMA issued €42.5bn MLT debt in 2020/21 at 12.8 yr. weighted maturity and avg. rate 0.19% Vast majority of Irish debt is fixed rate at average cost of 1.5% 30 5.5 25 3.9 20 2.8 6 18 15 4 3.2 Percent 2853085 13 €15 3 do 10 1.5 2 0.8 0.9 1.1 1.1 0.9 5 1 0.2 0.2 0 Syndication, Ihs Auction, Ihs Average yield, rhs Source: NTMA Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Note only auctions and syndication * EU data is EU as an issuer 3 O 01 FI T PT EA FR BE ES EFS NL DE EU* ESM Source: ESDM I Ratio Floating Debt to Total Debt After Derivatives 36#37NTMA has lengthened weighted maturity Debt management strategy has extended debt profile since 2015 Benchmark issuance has extended the maturity of Government debt since start of QE but still continue in 2023 25 Ireland (in years) compares favourably to other EU countries 20 20 15 45 15.0 11.9 11.0 10.9 12.5 8.9 8.7 8.4 7.8 7.8 7.6 7.3 7.0 10.0 7.5 5.0 Years 0.0 AT IE BE DK NL FR DE ES FI PT IT 2.5 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 Weighted average maturity Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: NTMA Gov't Debt Securities - Weighted Maturity Euro area Gov't Debt Securities - Avg. Weighted Maturity Source: ECB Note: Weighted maturity for Ireland includes Fixed rate benchmark bonds, FRNS, Amortising Bonds, Notes issued under EMTN programme, T-Bills and ECP Data. It excludes programme loans and retail. اسا 10 10 5 37 37#38Funding needs and sources for 2023 Lower borrowing amid expected EBR surplus ▸ There was one bond redemption in 2023 (€7.0bn in March). There is also a EFSM repayment due this year. Lastly, further buybacks of FRNs from the Central Bank of Ireland are expected (included in other funding requirements). 2023 funding range is indicated as between €7bn to €11bn. The Exchequer Borrowing Requirement (EBR) for 2023 is expected to be a surplus (hence shown as funding source). ▸ The NTMA is likely to continue to hold significant cash throughout 2023. The balance at year-end 2022 was c. €23bn. €bn 16 14 Increase in cash, 0.9 Other, 2.1 12 Other, 4.7 10 EBR, 4.5 EFSM, 2.0 6 4 2 Bond Redemptions, 7.0 Bond Issuance, 8.0 Funding Requirements Rounding may affect totals 1. On 1 December 2022, the NTMA announced a 2023 bond funding range of €7-€11bn. €8bn is the estimated cash proceeds from nominal issuance of €9bn - the mid-point of the range. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta 2. National Treasury Management Agency 3. Other funding needs includes provision for the potential bond/FRN purchases and general contingencies. EBR is the Department of Finance's SPU 2023 estimate of the Exchequer Borrowing Requirement Sources of Funding Source: NTMA 388 38#39Diverse holders of Irish debt Sticky sources account for greater than 60% Ireland roughly split 85/15 on non-resident versus resident holdings (Q4 2022) "Sticky" sources - official loans, Eurosystem, retail - make up c. 60% of Irish debt 250 200 Other Debt 150 (incl. Official) 23% IGBS Private Non Resident 100 31% 50 Retail, Resident 11% Eurosystem 31% Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Short term 0% IGBS Private Resident 3% Source: CBI, Eurostat, ECB 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 IGBS - Private Non Resident Short term Retail Total Debt (€bns) 2018 2019 2020 2021 2022 IGBS Private Resident Eurosystem Other Debt (incl. Official) Source: CBI, Eurostat, ECB IGBS excludes those held by Eurosystem. Eurosystem holdings include SMP, PSPP, PEPP and CBI holdings of FRNs. Figures do not include ANFA. Other debt has included IMF, EFSF, EFSM, Bilateral as well as IBRC-related liabilities over time. Retail includes State Savings and other currency and deposits. The CSO series has been altered to exclude the impact of IBRC. 39#40Investor base Demand for Government bonds is wide and varied Country breakdown: Average over last five syndications 7.2% 14.0% 48.8% Investor breakdown: Average over last five syndications 8.5% 11.2% 22.4% ■Ireland ■ UK US and Canada ■Continental Europe ■Nordics Asia & Other Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: NTMA 47.0% 33.4% ■Fund/Asset Manager Banks/Central Banks* Pensions/Insurance ■ Other Source: NTMA 40 * Does not include ECB. ECB does not participate on primary market under its various asset purchasing programmes#41Credit Ratings for Ireland S&P upgrade in May 2023; Ireland rated in AA category by all Outlook/ Rating Agency Long-term Standard & Poor's AA Fitch Ratings Moody's DBRS Morningstar Short-term Trend Date of last rating change A-1+ Stable May 2023 Date of next review 17th Nov 2023 AA- F1+ Stable Jan 2022 14th July 2023 Aa3 P-1 Stable Apr 2023 20th Oct 2023 AA(low) R-1 (middle) Stable Jan 2022 3rd Nov 2023 R&I AA- a-1 Stable Feb 2022 Q1 2024 KBRA Scope AA K1+ Stable May 2023 27th Oct 2023 AA- S-1+ Positive May 2021 15th Sept 2023 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 41#42Commission's ruling on Apple annulled Further appeal by EC means case continues In 2016, the European Commission ruled that Ireland illegally provided State aid of up to €13bn, plus interest to Apple. This figure was based on the tax foregone as a result of a historic provision in Ireland's tax code. The Irish Government closed this provision on December 31st 2014. Apple appealed the ruling, as did the Irish Government. The General Court granted the appeal in July 2020, annulling the EC's ruling. This case had nothing to do with Ireland's corporate tax rate. It related to whether Ireland gave unfair advantage to Apple with its tax dealings. The General Court has judged no such advantage occurred. The Commission have appealed to a higher court: the European Court of Justice. A judgement is next expected this year. Pending the outcome of the second appeal, the €13bn plus EU interest will remain in an escrow fund. The NTMA has not included these funds in any of its issuance plans in the past or currently. The funds are seen as separate and will be returned to Apple if the General Court's decision is upheld. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 42#43ESG Issuance & government policy demonstrate Ireland's green commitment Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 43 33#44Ireland's Greenhouse Gas emissions State of Play - emissions rose in 2021 after fall in Covid year Ireland will comply with the 2030 EU emissions reduction target if all planned measures are implemented as proposed Emissions from agriculture make up a significant portion of the total In Ireland (c. 10% in EU and US) 10 0 20 40 30 5 N WBO 80 70 60 50 Agriculture, 37.5% 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 With existing measures 2026 2029 2032 2035 2038 GHG emissions (Mt CO2 eq) With additional measures Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency F-gases, 1.2%. Source: Environment Protection Agency (Ireland) Industrial Processes, 4.0% Note: Metric used is million tonnes carbon dioxide equivalent (Mt CO2eq) Energy Industries, 16.7% Waste, 1.5% Transport, 17.7% Residential, 11.4% Manuf. Combustion, 7.5% Commercial Services, 1.3% Public Services, 1.1% 44#45Ireland Energy: Fossil fuels prevalent Irelands energy mix is reliant on fossil fuels but renewables share to increase by 2030 Oil accounts for the largest share of Irelands energy mix. Transport accounted for 63% of oil use in 2021 Peat, 1.7% Wastes Non- Coal, 2.4% Renewables, 4.3% Renewable, 0.5% Electricity, 21.9% Electricity production has become more renewables based but still far from Climate Action Plan aim of 80% by 2030 60% 50% 40% 30% 20% 10% Oil, 51.7% 0% Wind energy generated 34% of the total electricity used in Ireland in 2022 Gas, 17.5% Natural Gas Renewables (total) Wind Peat Coal Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: SEAI, Climate Action Plan, EU Renewable Energy Directive, Gas Networks Ireland Waste (non-renewables) accounted for 0% (2005) and <1% (2019) of electricity production 2005 2020 Oil Electricity imports (net) 45 45#46Climate Action Legislation The Climate Action & Low Carbon Development Act 2021 aims for Net Zero by 2050 Climate Action & Low Carbon Act: Carbon Budgeting: The Act embeds the process of carbon budgeting into law. It requires Government to adopt a series of economy-wide-five-year carbon budgets. 51% reduction: First carbon budgets will aim for a reduction of 51% of emissions by 2030. Climate Action Strategy: A national plan will be prepared every five years and actions for each sector will be update annually. All of Government approach: Local authorities are required to prepare a Climate Action Plan and public bodies obliged to conduct their functions in line with the national plan. Carbon Budgets & Sectoral Ceilings Budget Period MtCO2eq Average Annual Reduction 2021-2025 2026-2030 2031-2035 (provisional) 295 4.8% 200 8.3% 151 3.5% Sector % Reduction by 2030 relative to 2018 GHG emissions 2030 Ceiling Electricity Transport 75% 3 MtCO2eq 50% 6 MtCO2eq Buildings (Commercial and Public) 45% 1 MtCO2eq 40% 4 MtCO2eq 25% 4 MtCO2eq 25% 17.25 MtCO2eq 50% 1 MtCO2eq Buildings (Residential) Industry Agriculture Other* Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency *F-gases, Petroleum Refining and Waste 46#47Climate Action Plan 2023 Pillars to tackle emissions reduction Powering renewables .9GW onshore wind, 8GW solar and at least 7GW offshore wind by 2030 ⚫ Phase out and end use of coal and peat in electric gen'tion . Green Electricity Tariff incentive people to use lower cost renewable electricity at times of high wind and solar generation Building Better . Retrofit 500,000 dwellings by 2030 . Put heat pumps into 680,000 homes by 2030 . . Generate 2.5TWh of district heating by 2030 · Improve carbon sequestration and reduce management intensity of drained soils on grasslands Transport . Reduce distance driven across all car journeys by 20% . Walking, cycling, public transport will account for 50% of journeys .1 in 3 private cars will be EV's • Increase rural bus routes and frequency Agriculture Reduce use of chemical nitrogen as fertiliser Increase organic farming to 450,000 hectares . Expand indigenous biomethane sector . Contribute to delivery of land use targets for afforestation, reduce mgmt. intensity of organic soils • Increase uptake on protected urea on farms to 90-100% Enterprise . Reduce clinker content in cement and substitute products with lower carbon content for construction materials . Reduce fossil fuel share of final consumption • Increase total share of heating to 70-75% by 2030 . Grow the circular and bioeconomy Land Use • Increase annual afforestation rates to 8,000 hectares p/a from 2023 on · Promote forest management initiatives in forests to increase carbon sinks and stores . · Improve carbon sequestration and reduce management intensity of drained soils on grasslands ⚫ Rehabilitate 77,760 hectares of peatlands Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 47#48Irish Sovereign Green Bonds (ISGB) Over €10bn issued in Green; allocated to green projects following fourth year €10.35bn nominal outstanding across two bonds (€10.84bn cash equivalent) Cumulatively €7.34bn allocated at year end 2021 Issuance through both syndicated sales and auctions Pipeline for eligible green expenditure remains strong Launched 2018 and based on ICMA Green Bond Principles - Use of proceeds model Governed by a Working Group of government departments chaired by the Department of Finance Compliance reviews by Sustainalytics Four annual allocation reports and three annual impact reports now published Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Irish Sovereign Green Bond Impact Report 2020: Highlights* ▸ Environmentally Sustainable Management of Living Natural Resources and Land Use Number of hectares of forest planted: 2,434 Number of Landfill Remediation projects being funded: 76 ▸ Renewable Energy Number of companies (including public sector organisations) benefitting from SEAI Research & Innovation programmes as lead, partner or active collaborators: 19 SEAI Research & Innovation awards: 11 ▸ Sustainable water and wastewater management Water savings (litres of water per day) : 227.6 million New & upgraded water and wastewater treatment plants: 5 Length of water main laid (total): 178km *For a more detailed break-down please see the ISGB 2020 Impact Report 48 42#49Irish Sovereign Green Bonds (ISGB) Irish Sovereign Green Bond Impact Report 2020 & Allocation Report 2021: sample impacts • Some highlights from the report* Built Environment/ Energy Efficiency • Energy saving (GigaWattHours): 156 Number of homes renovated: 19,086 EV home charger grants provided: 2,523 . Clean Transportation • Number of public transport passenger journeys: 137.7 million Greenway users: 725,191** Take-up of Grant Schemes/ Tax foregone provided (number of vehicles): 24,122 Climate Change Adaptation • • 16 major Flood relief projects at planning, development or construction phase. 8,296 properties protected on completion Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Allocation in 2021 of ISGB funding has focused on Water/Waste management and transportation Built environment/ energy efficiency, 2.3% Clean transportation, 61.6% Renewable energy total, 0.4% Sustainable water and wastewater management, 25.9% Mgmt of natural resources, 7.6% Climate change adaptation, 2.2% *For a more detailed break-down please see the Irish Sovereign Green Bond Allocation Report 2021 **Raw count from 3 longest Greenways- Waterford, Old Rail Trail, Royal Canal Greenway 49#50On the "E" of ESG, Ireland is currently behind But we are viewed strongly on progress and commitment to SDG policy Ireland ranks behind leaders like Denmark in current environmental metrics Ireland ranked 9th globally on progress towards achieving the Sustainable Development Goals Denmark Sweden Chile Morocco India Norway UK Netherlands Germany EU France Italy Austria Ireland Belgium US 0 20 40 60 80 100 ■GHG Emissions Renewable Energy Energy Use ■Climate Policy Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 90 80 70 60 50 40 30 20 BRAN 100 10 Finland Denmark Sweden Norway Austria Germany France Ireland Estonia Switzerland Source: Climate Change Performance Index; OECD Sustainable development report 2022 UK Poland Latvia Czech Rep. Slovenia Spain NL Belgium Japan Portugal OECD average SDG 2022 Index Score SDG Government Commitment & Effort Score 50 50#51Ireland in top 20 most sustainable countries Ireland rated highly by Sustainalytics and rating agencies on ESG Ireland ranks 15th globally by Sustainalytics for ESG risk 16 14 12 10 CANDR6420 Moody's view on Ireland much like other agencies - strong governance a key risk mitigant CIS-1 Positive "For an issuer CIS-1 (Positive), its ESG attributes are overall considered as having a positive impact on the rating. The overall influence...... is material". SECTOR MEDIAN " POSITIVE IMPACT Norway Switzerland Luxembourg Sweden Australia Iceland Canada Denmark Finland Austria Ireland Netherlands Germany New Zealand United States United Kingdom Japan France Belgium Singapore Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Sustainalytics (2022), Moody's NEGATIVE IMPACT Ireland's ESG Credit Impact Score: "low exposure to environmental risk" "a positive influence of its social considerations" "very strong governance profile" Note: Sustainalytics score is out of 100, closer to zero means less ESG risk 51 5554#521.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Poverty Food Health Education Gender equality Water Energy Economy Infrastructure Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: OECD (2021) Ireland o OECD Each bar shows "distance" country needs to travel to reach each SDG. Distances are measured in standardised units with O indicating that the level for 2030 has already been attained: and 3 is the distance most OECD countries have already travelled. Bars show the average country performance against all targets under the relevant Goal for which data are available, and diamonds show the OECD average. Inequality Cities Sus. production 529 52 Climate Ireland compares well to OECD on "S&G" Based on the 17 Sustainability and Development Goals of the UN TH Oceans Biodiversity Institutions Implementation о О#530.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Readiness and vulnerability to climate change Irelands vulnerability to climate change and readiness to strengthen resilience have improved Ireland ranked middle of the pack for readiness* when Ireland's overall vulnerability** has decreased 4.8% from compared to EU27 1995-2020 0.45 Ireland ranked 18th least Ireland ranked 26th globally in readiness 0.4 vulnerable country 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Notre Dame Global Adaptation Initiative Food Sensitivity Indicators Capacity Indicators Health 2020 1995 Water Ecosystems Infrastructure Habitat Exposure Indicators *Readiness: Measures a country's ability to leverage investments and convert them to adaptation actions. ** Vulnerability: Measures a country's exposure, sensitivity and capacity to adapt to the negative effects of climate change. 53 33#54Structure of the Irish Economy Multinationals overstate economic prosperity but offer clear benefits of jobs, income, taxes Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 54#55Multinational activity distorts Ireland's data Notwithstanding those issues, MNCs have real positive impact Multinationals dominate GVA: profits are booked here but overstate Irish wealth generation Industry Domestic side of economy adds jobs; MNCs add GVA/high wages Percentage of Total Employment Compensation Finance Construction Arts & Otherri 5 Dist, Tran, Hotel & Rest 38 9 6 Real GVA of Employees Industry (incl Pharma) 14 14 38 ICT (Tech) 7 10 18 ICT 18 Dist, Tran, Hotel & Rest 24 18 9 Public Sector 29 28 9 Professional 10 14 9 Real Estate 0 1 6 Financial 5 8 5 9 Construction 5 4 3 Professional Agriculture Arts & Other 1 1 1 4 2 1 Real Estate Public Sector Source: Eurostat Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Note: RHS based on calendar-adjusted seasonally-adjusted data as of 2022 Q3. Source: Eurostat 55#56€0.67trn of intellectual property into Ireland Assets brought here by tech. & pharma. in recent years Ireland is now a leader in Computer Services; Exports have up from €50bn to €173bn since 2015 Enormous inflows (c. €0.67trn) of IP assets into Ireland since 2015 on the back of BEPS 1.0 and other tax reforms EUR, billion 175 150 125 100 75 50 25 30 25 - 20 15 - 10 01 2008 2010 2012 2014 2016 2018 2020 2022 Computer Services Exports, Ihs -Ireland % of World total, rhs 0 €billions, Constant prices 500 400 300 200 100 0 1995-2014 2015 2016-21 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO, WTO I 2015 once-off IP assets increase estimate Fixed Capital Investment - IP assets Source: CSO and NTMA analysis - Gross Fixed capital formation and Gross capital stock figures used in RHS chart 56 56#57Underlying economy above EA avereage MNCs add real substance to IE economy as wage bill filters out to domestic sectors Ireland's income = wages (all sectors) + domestic sectors profits + tax on MNC profits Ireland, on an underlying basis, growing faster than euro area average in recent years (2008 = 100) 300 250 200 150 Compensation 100 MNC Gross of Employees 50 Operating 28% 0 Surplus (Profits) Domestic 50% Gross Operating Surplus (Profits) 22% 1995 1997 1999 2001 I Compensation of Employee Real GVA EA19 MNC Sector Profits 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 Domestic Sector Profits Real GVA ex. MNC Profits Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO, NTMA calculations (Nominal 2021 data used in left chart) Ireland's GVA data has been adjusted to strip out the distortionary effects of some of the multinational activity that occurs in Ireland. Specifically a profit proxy is estimated for the sectors in which MNCs dominate. 57#58% of population 70 Ireland's population helps growth potential Age profile younger than the EU average but won't outrun aging demographics Ireland's population at 5.1m in 2022: younger population than EU Ireland's population will age rapidly in decades to come; to remain younger than most of its EA counterparts 60 Finland 0 10 20 30 40 50 60 70 80 90 Japan Italy 50 40 30 20 France Germany Sweden Denmark NL Belgium Spain 10 UK Austria 01 Canada <18 years 18-64 65+ Ireland Euro Area US Ireland World ■2020 Old Age Dependency Ratio 2050 Source: Eurostat Source: UNDESA Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 58 59#59thousand Migration improves Ireland's human capital Ireland's net migration has swung back and forth on economic performance Latest Census data show net migration positive since 2015 - last year saw large increase partly due to UKR refugee efforts Migration inflow particularly strong in highly educated cohort - work in MNCs attractive 150 100 50 -50 -100 1986 1990 1994 1998 2002 2006 2010 2014 2018 2022 I Emigration Immigration Net Migration Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Migration figures based on year to April thousand 30 25 20 15 10 -5 -10 -15 | T Third Level Other Education All Persons 12009 2015 average 2016-2022 average Source: CSO 59 59#60Brexit: Free Trade Agreement in place Allows for tariff free trade but non-tariff barriers have increased • Main points of FTA From January 1 2021, the UK became a "third country" outside the EU's single market and customs union. As such without a free trade agreement, trade would have been subject to tariffs and quotas. Under the deal, goods trade between the two blocs remain free of tariffs. • However, goods moving between the UK and the EU will be subject to customs and other controls. Due to these non-tariff barriers, Brexit will likely result in less trade. Under the deal, services trade between the two blocs will continue but again could be hampered. • The Agreement provides for a significant level of openness for trade in services and investment. • • But providing services could be hampered. For example, UK service suppliers no longer have a "passporting" right, something crucial for financial services. They may need to establish themselves in the EU to continue operating. The deal means less cooperation in certain areas compared to before Brexit. Financial and business services are only included to a small extent. Cooperation on foreign policy, security and defence will be lower also. Brexit is likely to result in less trade in the long run between the EU and the UK but the deal does avoid the worst case scenarios: Hard Brexit was averted and the economic impact to Ireland will be more modest. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 60 60#61Windsor Framework + NI Protocol Windsor Framework expands on NI Protocol agreement; NI parliament remains suspended Northern Ireland Protocol (signed in 2019) The withdrawal agreement (and the Northern Ireland Protocol within it) is a legally binding international treaty which works in tandem with the FTA. Northern Ireland remains within the UK Customs Union but will abide by EU Customs Union rules - dual membership for NI. No hard border on the island of Ireland: customs border is "in the Irish Sea". Windsor Framework (signed in 2023) Green lane/Red Lane: goods from the UK for NI will travel through new green lane, with a separate red lane for goods that might travel on to the EU. Border "in the Irish Sea" effectively ended for goods destined for NI market. VAT: EU VAT rules could be applied in NI whilst the UK can make "critical VAT" changes which include NI. Concerns on food/medicines/parcels have been addressed. Stormont Brake: Agreement gives the NI Assembly (at least 30 MLAs from two parties) the ability to pull an "emergency brake" if it disagrees with an EU goods law which would have significant and lasting effects. If the brake is pulled, the UK government could veto new EU laws but an arbitration process has been established also. Goods going to NI in Green Lane Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Goods destined for IE/EU in Red Lane 199 61#62Trading flows are changing after FTA ROI-NI trade jumped in 2021, both imports and exports NI trading route more important than ever for IE-UK trade - special trade status of NI a factor UK exit from single market will continue trend of lower goods trade between IE & UK 35 60% 30 50% 25 40% 20 15 30% 10 тличи 20% 5 10% 01 III I I I I 1974 1980 1986 1992 1998 2004 2010 2016 2022 0% Exports to NI (% of exports to UK) Imports from NI (% of imports to UK) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 -% of Irish agri exports going to UK Source: CSO % of other Irish goods exports going to UK Source: CSO 62 62#63Property & Banks Significant price pressures in recent years - tightening monetary policy having an effect Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency ☐ ☐ 63#64Prices up in recent years but stalling Supply hampered by the pandemic and inflation (c.33-40k units needed p.a.) House prices up 3.6% y-on-y, above previous peak in 2007 - Transactions still above pre-pandemic levels Rebase, 2007 = 100 110 100 90 80 70 60 Dublin seeing prices cool 50 40 1 2005 2010 2015 National Dublin Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 80 50 70 40 60 Number, thousand 30 50 20 do % 40 10 30 0 20 -10 10 --20 0 2020 2012 2014 2016 2018 2020 2022 14Q Sum of Transactions, Ihs -Y-o-Y Change, rhs Source: CSO Excluding Dublin Source: CSO * Some estimates have put housing needs as high as 60,000 a year over the coming decades 64 .#65Number, thousand 15 10 ம Supply outlook uncertain Stronger supply in 2022 but 2023 supply could be impacted by costs/interest rates New Dwellings Completions* estimated to be less than 30,000** in 2023, below 2022 level Housing starts show supply chain issues and inflation has started to weigh on development 35 30 25 thousand 35 30 25 20 15 10 5 0 | 2016 2017 2018 2019 2020 2021 2022 2023 | 2015 2017 2019 2021 2023 2025 New Dwelling Completion All Connections Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO Completions (new dwellings) Starts (advanced 12 months) Source: CSO, Department of Housing, Planning & Local Government Housing completions derived from electrical grid connection data for a property. Reconnections of old houses overstate the annual run rate of new building (all connections in graph). **CBI Forecast 65 59#66Inflation clear in construction sector Increased material costs obvious along but construction costs have softened Materials up 11.7% year-on-year in April possibly impeding new development, but inflation may have peaked 25 Labour costs in construction have eased but still remain above long run average 20 15 Jo 10 ம 10.0 5.0 0.0 ୪୧ -5.0 -10.0 I I -15.0 2022 2016 2017 2018 2019 2020 2021 - Industrial Price Index (materials and wages, y-o-y %) All building materials (y-o-y %) I 2010 2012 2014 2016 2018 2020 2022 - All NACE Economic Sectors Construction Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency RHS = weekly earnings on a 4Q yearly growth rate Source: CSO 66 99#67Demand is strong, but drawdowns slowing Increased net migration further fuelling tight demand in the housing market Mortgage drawdowns* increase starting to slow, fuelled by a fall in residential investment drawdowns Increased net migration and refugees from Ukraine** add demand for housing 100 80 60 40 20 0 100 40 40 90 20 80 0 do 70 -20 60 -40 50 - -60 I 40 2008 2010 2012 2014 2016 2018 2020 2022 First-Time Buyer Purchase, % total, lhs 30 20 Mover Purchase, % total, lhs 10 Residential Investment Letting Purchase, % total, lhs 0 - Total drawdowns, y-on-y %, rhs 2015 2016 2017 2018 2019 2020 2021 2022 Source: BPFI ■Natural population change Net migration Ukrainian refugees Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency *4 quarter sum used (LHS) ***Arrivals from Ukraine as of April 2022 20 67#68House prices continue to rise Inflation driven by strong demand, labour shortages and increased supply prices House prices up 3.6% in the year to April 2023. Monthly change was flat on March. Rents pressures remain strong with a y-on-y increase of 8.8% in April 30 200 20 3 175 10 do 0 210 150 125 di 100 -10 75 -20 50 -30 25 I I 2010 2015 2020 0 | | T | T 2006 2008 2010 2012 2014 2016 2018 2020 2022 National (M-o-M %), rhs National excl Dub (Y-o-Y %), Ihs - Dublin (Y-o-Y %), lhs National (Y-o-Y%), Ihs Rents (100-2005) - Price Source: CSO Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 68 89#69House price increases slowing Irish mortgage rates moving slower than other countries House prices have peaked in most countries but Irish prices declining at slower rate Pass-through from ECB hikes to mortgage rates much less than seen in other countries Mortgage interest rate on new lending for house purchase 102 98 $ 8 8 8 0.5 Finland Italy Portugal Austria Luxembourg Germany Greece I I I I I I I I -12-10 -8 -6 -4 -2 0 2 4 6 8 10 12 Netherlands Months since peak in house prices Cyprus Ireland Canada Germany United Kingdom Netherlands Norway United States Sweden Finland Belgium Spain Euro Area New Zealand - Ireland Source: StatCan, CBS, Nationwide, S&P Global, EUROPACE, Real Estate Norway (Eiendom Norge), REINZ, France Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency SCB, CSO, StatFin 1.0 1.5 2.0 2.5 3.0 excludes revolving loans and others ▲ 1/2022 4/2023 3.5 4.0 4.5 Source: ECB 49 69#70Ireland less vulnerable to rising interest rates But could pose a greater threat in the medium term Low share of adjustable rate mortgage and low HH debt to income ratios- Ireland less exposed to rising interest rates 250 NO ...but most mortgages in Ireland exposed to higher interest rates over the medium term 100 90 HH Debt % Gross Disposable Income 200 175 150 225 NL DK CA 80 ASTL SE 70 Percent 60 50 40 FI 30 UK FR Less vulnerable More vulnerable 20 125 10 IE BE JP PO 0 T 100 ES 2015 2016 2017 2018 2019 2020 2021 2022 DE US AT IT 75 Trackers Over 3 yrs fixed 10 20 30 40 50 60 70 80 90 100 | Variable & up to 1 yr fixed (excl. trackers) 1-3 yrs fixed New lending up to 1 yr fixed Share of Adjustable-Rate Mortgages in New Mortgage Issuance Source: OECD, ECB, FHFA Source: Central Bank of Ireland Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 70 10#71Ireland's Banking Sector Overview Less competition possible in decade to come • Banking sector well capitalised with sufficient liquidity buffers • Banks profitable as net interest margins will be helped by rising interest rate environment. Ulster Bank and KBC - both of which have no govt. ownership have decided to leave Irish banking market. Reduced competition is main impact. The Irish Government has sold its share in BOI. This leaves just AIB and PTSB with government involvement. Further tranches of AIB and PTSB shares were sold in 2023. The Government owned approx. 53% of AIB and 57% of PTSB at that stage. Sales are likely to be ongoing as government divests from sector. 3.0% 2.0% 1.0% 0.0% AIB Net Interest Margin BOI 2018 2019 ■2020 2021 2022 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 21 0 -1 -2 PTSB AIB Source: Annual reports of banks - BOI, AIB, PTSB *AIB Annual Results for full year 2022 Profit before Tax (€bns) BOI 2018 2019 2020 2021 2022 PTSB 71#72Capital ratios strengthened in last 10 years Bank's balance sheets contracted and consolidated since GFC CET 1 capital ratios allow for ample forbearance in 2022 Loan-to-deposit ratios have fallen significantly as loan books were slashed - euro area average LTD ratio is c. 85% 17% 200 180 160 16% 140 120 100 80 15% 16.6% 60 16.0% 16.1% 40 15.5% 15.3% 20 14% 14.7% 13% CET1 % (Transitional) CET1 % (Fully Loaded) AIB BOI PTSB Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Published bank accounts Loan-to- Deposit % Loans (€bn) Loan-to- Deposit % Loans (€bn) AIB BOI Dec-10 Dec-22 Note: "Fully loaded" CET1 ratios used. Refers to the actual Basel III basis for CET1 ratios. 72 12#73Common Equity Tier 1 Ratio, Percent Ireland's banking sector well positioned CET1 ratios are high and liquidity coverage ratio is better than EU average 15 20 19 18 17 2222413 2 12 Ireland Belgium Finland 16 EU (SSM countries) Germany Netherlands Italy France Austria Spain Portugal I I | I I | I I | | T | 140 150 160 170 180 190 200 210 220 230 240 250 260 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: ECB (Q3 2023 data) Liquidity Coverage Ratio, Percent Source: ECB 73#74Disclaimer The information in this presentation is issued by the National Treasury Management Agency (NTMA) for informational purposes. The contents of the presentation do not constitute investment advice and should not be read as such. The presentation does not constitute and is not an invitation or offer to buy or sell securities. The NTMA makes no warranty, express or implied, nor assumes any liability or responsibility for the accuracy, correctness, completeness, availability, fitness for purpose or use of any information that is available in this presentation nor represents that its use would not infringe other proprietary rights. The information contained in this presentation speaks only as of the particular date or dates included in the accompanying slides. The NTMA undertakes no obligation to, and disclaims any duty to, update any of the information provided. Nothing contained in this presentation is, or may be relied on as a promise or representation (past or future) of the Irish State or the NTMA. The contents of this presentation should not be construed as legal, business or tax advice. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 74