#1Ireland: Strong recovery improves the fiscal position NTMA Investor Presentation December 2021 pwc Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency#2Index Summary - Page 3 Macro - Page 8 Fiscal - Page 24 NTMA Funding - Page 33 ESG Sustainability - Page 43 Structure of Irish economy - Page 55 Brexit - Page 64 Property - Page 70 Banks & other data - Page 77 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 2#3Summary Irish economy rebounding after initial 2020 Covid Shock Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ B#4Economic recovery strengthening Vaccine rollout underpins spending led recovery Domestic demand* gives better picture of Unemployment steadily falling as economic Covid economic impact recovery underway 40% 30% 20% 10% 700 600 500 400 300 200 0% -10% -20% 2005 2006 2008 2010 2012 2013 Domestic Demand Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 2015 2017 2019 2020 GDP 100 Value added from ICT & pharma has given Ireland resilience 250 200 150 100 50 0 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Unemployment Claimants (Index, Jan 20 = 100) 1995 1998 2000 2002 2004 2007 2009 2011 GVA: Domestic sectors 2013 2016 2018 2020 GVA: Multinational dominated sectors (€bns) Source: CSO, NTMA Analysis * Domestic demand series accounts for multinational activity and known as modified final domestic demand (excludes inventories)#5Ireland's Debt to GNI* to rise modestly in 2021 Large fiscal response to Covid but Government aims for primary surplus by 2023 2021 GG deficit forecasted at €13.3bn (5.9% of GNI*) but could be smaller 10% Debt position reversed by Covid response Debt fell from 166% to 95% of national income pre-Covid 180% Debt-to-GNI* 160% 5% (106% 2021f; 95% in 2019) 140% 0% 120% -5% Debt-to-GG Revenue (254% 2021f; 232% in 2019) 100% 80% -10% 60% -15% -20% Average interest rate (1.4% 2021f, from 2.2% in 2019) 40% 20% 1995 2000 2005 2010 2015 2020 0% GG Balance (% GNI*) Primary Balance (% GNI*) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Debt-to-GDP^ (55% 2021f, from 57% in 2019) Source: CSO, Department of Finance forecasts ^ Debt to GDP is not an appropriate metric to use for Ireland 1995 2000 2005 2010 2015 2020 Debt to GNI* -Debt to GDP 5#6Medium term economic challenges Covid recovery, deficit reduction and inflation Recovery Modest level of restrictions in place and vaccine rollout a success National accounts and spending data confirm recovery continued into Q3 Fiscal Significant stimulus of c.23% of GNI* announced since 2020 but not likely to be all used Public support to economy expected to be scaled back from 2022 Inflation High inflation in Ireland in recent data similar to other developed economies Inflation rates likely to fall back in 2022 but prices more of a consideration for policymakers now than pre- Covid Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency CO 6#7NTMA funded €18.5bn in 2021 Funding range for 2022 is €10-14bn as strong cash position provides flexibility Cash Improving fiscal position alongside NTMA's strategy of prefunding means Ireland has a strong cash position heading in 2022 This affords the NTMA a large degree of flexibility >10 years Weighted average maturity of debt one of longest in Europe NTMA issuance since 2015 has a weighted average maturity of 15 years (including bonds and private placements) AA- Ireland rated in the AA category with S&P Despite Covid impact both Moody's and DBRS have upgraded the outlook for Ireland to positive highlighting Ireland's resilience and fundamentals Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 7#8Macro Rebound in spending and labour market highlights recovery Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 8#91400 1200 1000 800 600 400 200 Case numbers rising quickly in recent weeks While hospitalisations and deaths are increasing more slowly; minor restrictions introduced 14 day Covid-19 cases/deaths per 100k of population Ireland case numbers versus other countries (per 100k of population) Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Cases -Deaths (RHS) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: DataStream Sep-21 Nov-21 25 1400 20 20 1200 1000 15 800 10 600 400 5 200 Jan-20 A -Ireland Germany US Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 | Jul-21 -UK 늣 Sep-21 Nov-21 9#10Jan-21 Feb-21 Mar-21 Apr-21 Vaccine rollout allowed economy to recover c. 77% of total population fully vaccinated with c. 26% having received a booster Rollout progress shielded populace from worst of virus in Ireland near the top in terms of vaccine rollout in Europe 2021 100 Portugal Spain 80 Japan Canada 60 40 20 Ireland Belgium Netherlands Finland Italy France May-21 Jun-21 Jul-21 Aug-21 % of population fully vaccinated % of population with at least one dose Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: DataStream Sep-21 Oct-21 Nov-21 Dec-21 Germany UK EU28 US 0 20 40 60 80 100 Population: % fully vaccinated Population: % one dose 10 10#11Ireland performed relatively well amid Covid GDP growth does not tell the appropriate story, domestic demand gives the best guide GDP growing strongly, modified domestic demand began rebound in Q2 - MDD likely back to 2019 levels by year-end Covid impact (-4.9%) smaller for Ireland than EA and UK - recovery forecasted to be stronger than others 40% 30% 20% 10% 0% -10% -20% 2005 2007 2009 2011 2013 2015 2017 2019 2021 110 108 106 104 102 100 98 96 94 92 90 US Ireland (MDD) Belgium EA-19 Germany France UK Domestic Demand GDP Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 2020 (2019 = 100) Source: CSO, Department of Finance forecasts, IMF forecasts for other economies Note: MDD for Ireland is modified for multinational activity by Ireland's Central Statistics Office (CSO). MDD = Consumption + Government (current) spending + Modified Investment 2021 2022 11#12Consumption-led recovery underway Strong recovery in spending data in Q2 (+14.5%) maintained in Q3 (+0.5%) Recovery in spending began in Q2 (y-o-y growth) but Q3 disappointed a bit vs. consensus in terms of growth 20% 15% 10% 5% 0% -5% -10% -15% -20% 2006 2008 2010 2012 2014 2016 2018 2020 Spending continued into Q4: now seven straight months of card spending in excess of 2019 levels 60% 40% 20% 0% -20% -40% וי Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 Investment Other Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Consumption ...... MFDD ■Spending on debit and credit cards (y-o-y change) I Spending on debit and credit cards (versus 2019 average) Source: CSO, CBI * MFDD is a domestic demand series, it accounts for multinational activity and known technically as modified final domestic demand (excludes inventories) ** CBI spending data is nominal data and not seasonality adjusted May-21 Jul-21 Sep-21 Nov-21 12#13Sector performance during Covid period. Multinationals outsized performance, domestic side hit hard 60% 47% 50% 40% Domestic sectors hit hard - these has begun to recover as restrictions eased 30% 21% 20% 10% 2% 2% 1% 0% -10% Two sectors least -20% impacted are dominated by FDI -7% -7% -15% -16% -30% Industry (Incl. Pharma) ICT Public Admin, Educ & Health Real Estate Agri, Forest and Fish Fin and Insurance Prof, Admin and Support Construction Dist, Trans, -22% Arts, Hotels and Rest Entertainment Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO GVA Growth (2020Q4 to 2021Q3 versus 2019) 13#1435 30 25 20 15 10 5 Jan-05 Oct-05 90-Inr Labour market improving in recent months Unemployment rate slowly decreasing as workers fall off income support schemes Covid-19 adjusted unemployment rate* fell to 6.9% in Apr-07 Jan-08 Oct-08 Jul-09 Apr-10 Jan-11 Oct-11 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta Jul-12 November Actual hours worked remains resilient for MNC firms while pandemic-affected sectors closer to "normal" 120 110 100 90 80 6.9 70 5.2 Apr-13 Jan-14 Oct-14 Jul-15 Apr-16 Jan-17 Oct-17 Jul-18 Apr-19 Jan-20 Oct-20 - Unemployment Covid-19 Adjusted Unemployment Rate National Treasury Management Agency Source: CSO Jul-21 650 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 ICT + Industry (incl. Pharma) Others Pandemic sectors All Sectors * The CSO have estimated this as the upper bound of the unemployment rate. The CSO have urged caution around this data given the likelihood of revisions and the unique nature of employment in the pandemic. 14#15Millions 0.8 0.6 0.4 0.2 0 Mar-20 Apr-20 1.2 1 May-20 Jun-20 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Those on the PUP has fallen to c. 50k but fall in EWSS Over 50% fall in those on income support Approx. 350k on income support; down from above 800k in Q1 2021 Jul-20 Aug-20 Sep-20 Oct-20 number much more gradual Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Wage Subsidy Scheme (TWSS/EWSS) Pandemic Unemployment Payment Source: CSO, DataStream Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 -6% Supports helped disposable income grow in 2020 more akin to US than EU 10% 8% 6% 4% 2% 0% -2% -4% Canada ՏՈ Ireland France EU-27 Australia Netherlands Belgium Germany Denmark EA-19 UK Italy Greece Austria Spain Portugal I Gross Disposable Household Income (y-o-y change 2020) 15#1636 34 32 30 28 26 24 22 20 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Disposable income on pre-Covid trend Consumption not fully recovered, but retail sales show continued improvement Consumption below trend but household incomes are there to spend Retail sales strength alongside economy re-opening - hospitality restrictions will impact that sector 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Consumption (€bn) Disposable income(€bn) Source: CSO Note: RHS chart growth rate versus two years previously 40% 20% 0% -20% -40% -60% -80% -100% 19M01 19M03 19M05 19M07 All Retail Bars 19M09 19M11 20M01 20M03 20M05 20M07 20M09 20M11 21M01 21M03 21M05 21M07 Food Retail -Department Stores 21M09 16#17Investment is rebounding Modified investment is close to pre-pandemic levels Building and Construction hampered by lockdown but other investment rebounding (y-o-y growth) IP distortions less than in previous quarters - surge in 2020 likely tax regime related 40% 30% 20% 10% 0% -10% -20% -30% -40% 1997 2000 2003 2006 2009 2012 2015 2018 2021 -Investment Building & Construction Investment ex B+C Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO; NTMA calculations RHS Chart is 4Q sum in Euro billions 300 250 200 150 100 50 I Distortions (mainly IP) Building Investment Other Domestic Inv. Modified GFCF 17#18Household balance sheets improving Debt levels much lower coming into pandemic + new Covid savings Savings as % of Disposable Income (4Q MA) Gross HH saving rates have jumped in Ireland more than in most countries due to forced savings/income supports 30 25 20 22 15 10 5 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 -Ireland EA-19 UK Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta Source: Eurostat, ONS, CSO; CBI National Treasury Management Agency Legacy of 2008-12 financial crisis is on Government not private balance sheets 157% 180% 160% 140% 135%29% 120% 109% 105% 100% 71% 80% 68% 64% 60% 44% 40% 20% 0% Household debt (% of GNI*) SME debt (% of Public debt (% of GNI*) GNI*) 2003 2008 2013 2020 51% 35% 18% Note: Gross Savings as calculated by the CSO has tended to be a volatile series, some caution is warranted when interpreting this data 18#19External environment supportive 2021 seeing the global economy rebound given large stimulus & vaccines 2020 2021 Exports driven by demand for multinationals products - Pharma. and Tech EA Monetary Policy Max accommodative Max accommodative 50% EU Fiscal Policy Expansionary Expansionary 40% 30% US Monetary Policy Max accommodative Max 20% accommodative* 10% US growth Covid-19 shock Rebound 0% -10% Oil price Significantly down Rising -20% UK growth Covid-19 shock Rebound 2000 Euro Growth Covid-19 shock Rebound EA Inflation Close to Zero Rising Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: NTMA analysis, CSO *prior to the Q4 taper 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 - Exports -Chemical Products and Computer Services - Exports ex. Chem & Comp 19#20-2 4 9 1997 1998 1999 Inflation at 5.4% in Ireland There are transitory and pandemic elements but core inflation also rising. Inflation has jumped after subdued decade Energy prices driving a proportion but core inflation also rising 2001 2002 ⚫HICP Ireland 2004 2005 2006 2008 2009 2011 2012 2014 2015 2016 2018 2019 2021 HICP Euro area PCE US Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO, DataStream, NTMA analysis 86 420 ~ + -2 1996 1998 1999 2001 2002 2004 2005 2006 2008 2009 2011 2012 2013 -HICP Core HICP 2015 2016 2018 2019 2021 20 20#21Elements of re-opening and energy evident Detailed inflation data suggest inflation is unlikely to remain elevated (above 4%) Biggest pick-up in inflation concentrated in energy and Covid- hit sectors "Transitory" areas seeing double-digit inflation, but there may be continued pressure on rents -505 10 15 20 All items Food & non-alcoholic bev. Alcoholic bev. & tobacco Clothing & footwear Housing & utilities Furnishings & hh equip. Health Transport Communications Recreation & culture Education Restaurants & hotels Misc. goods & services Selected sub-indices inflation readings, Nov 2021 (y-o-y %) Liquid fuels (home heating oil) 71.4 Passenger transport by air 64.8 Diesel 29.2 Natural gas 27.9 Petrol 26.0 Accommodation services 21.8 Electricity 20.9 Purchase of vehicles 9.0 Nov-21 3yr average Actual rents paid by tenants 7.3 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO, NTMA analysis 21 21#22Sustained inflation a possible risk Expectations and Phillips curve have historically strong relationship with inflation Inflation expectations picking up for consumers and businesses Wage pressure not prevalent currently but Philips curve has held in Ireland in recent past 60 60 40 40 20 0 -20 Jan-14 Aug-14 Mar-15 Oct-15 May-16 Dec-16 Jul-17 Feb-18 Sep-18 Apr-19 Nov-19 Jun-20 Jan-21 2 Aug-21 0 -2 6% 4% 2% do do do do 10% 8% Nominal COE growth per head* Consumer expectations (LHS) Services expectations (LHS) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Industry expectations (LHS) Headline inflation (RHS) Source: Eurostat, CSO, Department of Finance *Excludes agriculture incomes 0% Covid years are outliers -2% -4% 2% 5% 8% 11% 14% 17% 20% Unemployment Rate 22 22#23OECD's BEPS process may impact FDI offering Ireland signs up to agreement after initial reservations 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 up to €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. ▸ Ireland had reservations on the minimum tax rate proposal but signed up after further clarity was given. ▸ 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. ▸ Ireland can lean on other positives; educated and young workforce, English speaking, EU access, and ease of doing business ▸ At 15% corporate tax rate, Ireland's rate remains one of the lowest in the EU. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 23 23#24Fiscal Revenues have rebounded in 2021 helping narrow deficit Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 24 24#25Necessary fiscal response to Covid working Deficit to be lower than expected in 2021 but large in historical context Response Total fiscal response of €48bn since 2020 (c. 23% of GNI*) is large but may not be fully used Ireland has responded to Covid with first attempt at counter-cyclical fiscal policy in its 100 year history Revenues Ireland's economic structure has meant revenues have rebounded despite Covid-19 Strength of both Corporate and Income tax revenues from multinational sectors has helped grow government finances Debt Debt ratios have reversed due to Covid with modest increased expected in 2021 for debt to GNI* Ratios forecasted at 106% for end-2021 after 105% in 2020 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 25 25#2650 40 30 20 10 Total Covid-19 fiscal response (% of GDP/GNI*) Ireland's Covid fiscal aid c. 23% of GNI* Highly skewed to direct supports unlike others in EU NL Korea Sweden Portugal Norway Finland Denmark Canada Switzerland Belgium Spain New Zealand Australia Singapore Ireland (GNI*) France Direct Supports Indirect Supports ՏՈ UK Germany Japan -10 -12 -2 -4 -6 -8 LX Sweden Denmark Switzerland 2021 GG Balance (forecast, % of GDP or GNI*): Ireland's figure of -5.9% likely to be beaten Finland Portugal Cyprus Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: IMF, European Commission, Department of Finance Direct supports = Additional spending and forgone revenue. Indirect supports = Equity, loans, and guarantees NL Austria EA-19 Germany Slovenia Slovakia Ireland (GNI*) Belgium Spain France Italy Japan Greece UK ՏՈ 26 26#27Fiscal response to Covid is opposite of GFC Interest bill won't balloon and investment set to increase After global financial crisis, Ireland cut capital spending, paid more interest as taxes fell... ...now revenues are more resilient, spending (incl. inv.) increases, interest bill unchanged €bns 10 32242505 15 -5 -10 -15 -20 €bns GG Capital expenditure 25 121 20 15 GG Interest 10 Costs 5 GG Expenditure (underlying) 0 GG Revenue -5 -10 19 20 21f 22f 23f 24f 25f 07 08 09 10 11 12 13 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO, Department of Finance forecasts. Charts represent the change in billions for selected fiscal variables versus 2007/2019 levels. Underlying GG expenditure numbers used (excludes banking recapitalisations) 27 27#2810% 5% 0% Deficit in 2021 could be smaller than expected Ireland plans for primary surplus in 2023 and GG balance in 2025 Gen. Govt. Balance (% of GNI*) will be in significant deficit in 2021 but it may be half that of 2020's deficit Revenues strong in 2021; income tax and corporate tax are strong even versus pre-pandemic levels -5% -10% 2021f GGB % of -15% GNI* -5.9% -20% 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021f 2023f 40% 30% 20% 10% 0% -10% Income tax GG Balance (% GNI*) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency -Primary Balance (% GNI*) Source: CSO; Department of Finance I Corporation tax Revenue ^ Underlying GG and primary balance numbers used (excludes banking recapitalisations) 2021 vs 2019 (YTD) VAT Excise duties Expenditure 28 28#29GG debt to GNI* increasing on Covid response Debt close to 106% of GNI* in 2021 jump of 11pp versus 2019 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% 1995 1999 2003 2007 2011 2015 2019 2023f -Debt to GNI* Debt to GDP Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO; Department of Finance 29 29#3025% 20% 15% 10% 5% 0% -5% -10% -15% -20% The "i-g" snowball effect in Ireland's favour Low interest rates coupled with reversion to growth underpins debt dynamics With low rates locked in, Ireland's "hurdle rate" for a positive Histogram of Ireland's recent growth history (2001-2020) snowball effect is low 1998 2000 2002 2004 2006 2008 2010 2012 2014 i-g Growth (GNI*) 2016 2018 2020 2022f 2024f -Average Interest Rate Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO; Department of Finance forecasts, NTMA analysis 10 Number of years 2 4 6. O Nominal GNI* grew by more than 4% in 14 of last 20 years <-8% -6-4% -4-2% -2% 0-2% 2-4% 4-6% 6-8% 8-10% GNI* Annual Growth rate GDP ■GG Revenue 10-12% 12%+ 30 30#31Revenues increased despite Covid CT revenue growing due to multinationals; income tax base helped by progressive system Corporation tax (CT) receipts have jumped again in 2021 to c. €14bn for the year 25% 20% 15% 10% 5% 0% 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021f 2023f 2025f Corporation Tax (€bns, RHS) -Corporation Tax (% of tax revenue) Corporation Tax (% of GG Revenue) Progressiveness of income tax system and sector mix limited hit to overall receipts and helped with revenue rebound 18 40% 15 35% 12 30% 25% 9 20% 63 15% 10% . 5% 0% Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Department of Finance, Revenue, NTMA analysis Under 10K 10K-30K 30K-50k 50K-100K % of taxable income cases % of income tax collected 100k-150k 150K+ 31#32Alternative Debt Metrics Need to assess other metrics apart from debt to GDP when analysing debt sustainability GG debt to GG revenue % GG interest to GG rev % GG debt to GDP % 2021f Greece Italy 423% 5.4% 203% 330% 7.3% 154% Portugal 288% 5.8% 128% Spain 282% 5.2% 121% UK 279% 5.7% 103% Cyprus 260% 4.8% 104% Ireland 254% 3.5% 56% (106% GNI*) Belgium 230% 3.5% 113% France 221% 2.2% 115% EA19 217% 3.0% 100% Slovenia 178% 3.2% 78% EU28 176% 3.3% 78% Austria 169% 2.3% 83% Germany 156% 1.2% 71% Slovakia Netherlands 153% 2.9% 62% 134% 1.1% 58% Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: EU Commission, Department of Finance forecasts for Ireland 32 32#33NTMA Funding Flexibility in funding strategy due to cash balances, smooth maturity profile and long average life Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 33#34NTMA funded €18.5bn in 2021 Funding range for 2022 is €10-14bn as strong cash position provides flexibility Cash Improving fiscal position alongside NTMA's strategy of prefunding means Ireland has a strong cash position heading in 2022 This affords the NTMA a large degree of flexibility >10 years Weighted average maturity of debt one of longest in Europe NTMA issuance since 2015 has a weighted average maturity of 15 years (including bonds and private placements) AA- Ireland rated in the AA category with S&P Despite Covid impact both Moody's and DBRS have upgraded the outlook for Ireland to positive highlighting Ireland's resilience and fundamentals Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 34 ==#35Billions € 6420 22 20 18 16 14 12 10 High level of flexibility in NTMA issuance plans Helped by smoother maturity profile 2021 2022 2023 2024 2025 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: NTMA 2026 2027 2028 2029 2030 2031 2032 Bond (Fixed) EFSM EFSF Bond (Floating Rate) A Green Other (incl. SURE) 2033 2034 2035 2036-40 2041-45 2046-50 2051-53 2054+ 35 35#36Lower supply expected in coming years. Lower borrowing costs also provides NTMA with flexibility NTMA issued €42.5bn MLT debt since 2020 at 12.8 yr. weighted maturity and avg. rate 0.19% 30 5.5 6 80 Revised borrowing requirements suggest NTMA issuance won't match recent past in coming years (€bns) 25 3.9 20 2.8 15 10 5 50 st 70 4 60 3 50 EBR 1.5 40 2 40 0.8 0.9 0.9 30 1 0.2 0.2 20 0 Redemptions 0 Auction 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Syndication (€bns) -Avg. Yield % (RHS) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: NTMA, Department of Finance LHS chart showing marketable MLT debt (auctions and syndications). Other issuance such as inflation linked bonds, private placement and amortising bonds occurred but not shown. 10 0 Issuance (2018-2021) Redemptions + est. EBR (2022-25) 36 36#37NTMA has lengthened weighted maturity Debt management strategy took advantage of QE to extend debt profile since 2015 Benchmark issuance has extended the maturity of Government debt... ...Ireland (in years) compares favourably to other EU countries (October data) 20 15 10 10 5 10 14 12 22% 8 6 11.5 10.9 10.8 4 8.3 8.3 7.9 7.9 7.4 7.2 7.1 7.0 2 0 2015 2016 2017 2018 2019 2020 2021 Weighted Average Maturity Issued (Years) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency AT BG IR NL ES FR DK BD FN IT PT I Govt Debt Securities - Weighted Maturity EA Govt Debt Securities - Avg. Weighted Maturity Source: NTMA for Ireland data; ECB for other countries 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. 37 37#38Funding needs and sources Borrowing requirement lower in 2021 means extra cash into 2022 No bonds mature in 2021. The next bond redemption is not until March 2022. €25 Change in Cash 3.7 Other: 4.0 €20 ▸ The Exchequer Borrowing Requirement (EBR) for 2021 is set to be lower than expected. In October's budget forecasted EBR was €12.1bn. It will likely be lower than that. Thus, NTMA will enter 2022 with a large cash balance in excess of €20bn. €15 €10 In 2021, NTMA has received monies from the EU SURE scheme. It is a diversified source of funding (c. €2.5bn). Source: NTMA Notes: Rounding may affect totals 2. 3. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 4. 5. Other: 4.4 UK Bilateral: 0.5 Net Short-term paper 4.4 EBR: 12.1 €5 €- Funding Requirements (€bn) Sure: 2.5 Bond issuance: 18.5 Sources of Funding (€bn) 1. The NTMA bond funding range for 2021 was €18-€20bn. While €18.5bn nominal was issued. Other funding needs includes provision for the potential bond/FRN purchases and general contingencies. Other funding sources includes retail (State Savings) and private placements and cash proceeds from issuance. SURE refers to the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency. EBR is the Department of Finance's Budget 2022 (Oct 2021) estimate of the Exchequer Borrowing Requirement 38 38#390 2 1 Q1 2015 € Billions 3 + 5 Q2 2015 Q3 2015 9 ECB's purchases have offered strong support PEPP expected to end in 2022 but support from ECB will continue in other forms Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 IPSPP Net IGB purchases (LHS) PEPP/PSPP net purchases (LHS) Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021f Q1 2022f Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: ECB, NTMA Calculations Notes: Forecasts sees Ireland's capital key of 1.69% and assumes 90% of new purchases will be for public sector assets with 7% of public sectors assets being supranational issuers. Cumulative Net ECB Purchases (RHS) 39 0 OHN WAS28 10 50 40 30 20 80 70 60#40Resident 11% Ireland roughly split 85/15 on non-resident versus resident holdings (Q2 2021) Diverse holders of Irish debt Sticky sources account for over 55%; will increase further with Eurosystem's PEPP 250 200 Other Debt (incl. Official) 22% 150 IGBS - Private Non Resident 100 32% Retail, 50 2005 2006 2007 2008 2009 "Sticky" sources - official loans, Eurosystem, retail - make up over 55% of Irish debt Eurosystem 26% Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency IGBS Private Resident 5% Short term 4% Source: CSO, Eurostat, CBI, ECB, NTMA Analysis IGBS Private Non Resident Short term Retail Total Debt (€bns) IGBS Private Resident Eurosystem Other Debt (incl. Official) 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. 40 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021#41Investor base Demand for Government bonds is wide and varied Country breakdown: Average over last five syndications 8.8% 14.6% Investor breakdown: Average over last five syndications 11.8% 24.0% 42.4% 7.2% ■Ireland ■US and Canada ■ Nordics ■UK ■Continental Europe ■ Asia & Other 10.0% 46.6% 31.6% ■Fund/Asset Manager Banks/Central Banks* ■ Pensions/Insurance ■ Other Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: NTMA * Does not include ECB. ECB does not participate on primary market under its various asset purchasing programmes 41#42Credit Rating for Ireland Ireland rated in "AA" category by Standard & Poor's Rating Agency Long-term Short-term Outlook/ Trend Date of last change Date of next review Standard & Poor's AA- A-1+ Stable Nov 2019 2022 Fitch Ratings A+ F1+ Stable Dec 2017 Q1 2022 Moody's A2 P-1 Positive Aug 2021 2022 DBRS Morningstar A(high) R-1 (middle) Positive July 2021 Q1 2022 R&I A+ a-1 Stable Jan. 2021 Q1 2022 KBRA AA- K1+ Stable Jan. 2020 Dec 2021 Scope AA- S-1+ Stable May 2021 2022 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 42#43ESG Sustainability Issuance & government policy demonstrate Ireland's green commitment Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency ☐ ☐ 43 33#4480 Ireland's Greenhouse Gas emissions State of Play Ireland's emissions fell post financial crisis - Covid likely meant they fell again in 2020 Emissions from agriculture make up a more significant portion of total In Ireland (c. 10% in EU or US) 60 60 40 20 1990 - 1992 --- 1994 1996 -- 1998 2000 Other Industrial Processes Residential Agriculture 2002 2004 - 2018 Transport I Manufacturing Combustion Energy Industries Total GHG emissions Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Environment Protection Agency (Ireland) Energy Industries 16% Waste 2% Agriculture 35% Residential 11% Manuf. Combustion 8% F-gases 2% Commercial Services 1% Industrial Processes 4% Transport 20% Public Services 1% Note: Metric used is million tonnes carbon dioxide equivalent (Mt CO2eq)) 44#45Irelands Energy Breakdown 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 71% of oil use in 2019 Coal Renewables 4% 2% 1% Peat Wastes Non- Renewable 0% Electricity production more renewables based but still far from Climate Action Plan aims of 80% by 2030 Wind generation was the second largest source of electricity in 2019 60% 50% 40% 30% 20% Electricity 20% 10% 0% Oil 57% Gas 16% Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Natural Gas Renewables (total) Wind Peat Hydro Other renewables Share of electricity generated in 2019 by fuel type Electricity imports (net) Coal Oil Wastes (non-renewable) Solar Source: SEAI, Climate Action Plan 2021, EU Renewable Energy Directive 45 45#46Ireland in top 20 most sustainable countries Ireland rated highly by Sustainalytics and rating agencies on ESG 16 Ireland ranks 15th globally by Sustainalytics for ESG risk 14 12 10 8 4 2 006+ NO 0 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 Norway Switzerland Luxembourg Sweden Australia Iceland Denmark Canada Finland Austria New Zealand United States Netherlands Germany Ireland Japan France United Kingdom Singapore Belgium Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Sustainalytics (2021), 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 " POSITIVE IMPACT 46 46#47Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Climate Action Legislation The Climate Action & Low Carbon Development Act 2021 supports transition to Net Zero by 2050 51% reduction: First carbon budgets will aim for a reduction of 51% of emissions by 2030. Sectoral Action Plans: Actions for each sector detailed in the Climate Action Plan, to be updated annually. 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. 80 60 40 20 0 Legally binding targets: Govt. Ministers responsible for achieving targets for their sector. Climate Action Strategy: A national plan will be prepared every five years. All of Government approach: Local Authorities is required to prepare a Climate Action Plan and public bodies obliged to conduct their functions in line with the national plan. Gas Exploration: Government approved draft amendments to end the issuance of new licenses for the exploration and extraction of gas. 1990 1994 1998 2002 2006 2010 Source: Department of the Environment, Climate and Communications, EPA, NTMA Economics analysis 47 2014 2018 GHG emissions ((Mt CO2eq))) Without legislated measures Climate Act 2021 commitment 2022 2026 2030#48Plans to significantly increase use of wind Climate Action plan outlines significant increase to wind generated electricity Climate Action Plan Goals: 12% ▸ Reduce emissions from electricity by up to 81% from 2018 levels. Target of 5GW of offshore and up to 8GW of onshore wind energy by 2030. 10% Renewable energy share of final energy consumption was 11% in 2019. Goal to increase to 38-40% by 2030 8% Enable 500,000 sustainable travel journeys per day. Increase biofuel use in transport. Increase proportion of kms driven by electric cars to 40-45%. All replacements for bus & rail vehicles to be low or zero carbon emissions and increased rollout of rural public transport. 6% 4% 2% 29-41% reduction in emissions through increased uptake of carbon-neutral heating and decreasing embodied carbon in building materials ▸ Commitment to retrofit 500,000 homes by 2030 and install 680,000 renewable energy heat sources in new and existing residential buildings. 0% 2005 2008 2011 2014 2017 ■Hydro Wind Biomass Landfill Gas Biogas Liquid Biofuels ■Solar Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: SEAI, Climate Action Plan 2021 48 42#49Close to OECD average on progress But behind some of the leaders in Europe Ireland similar to OECD but behind others when considering intensity metrics Ireland compares well to the OECD average GHG OECD emissions Ranking (1st per unit of CO2 OECD % emissions Ranking (1st Renewable OECD Ranking (1st 0.0 = High per unit of = High energy is desirable) GDP Intensity) GDP Intensity) supply 0.5 Ireland 0.2 30 0.09 35 11.1 24 1.0 Ire (GNI*) 0.3 11 0.14 24 OECD 0.3 n/a 0.14 n/a 1.5 Australia 0.5 2 0.32 2 7.1 35 Belgium 0.2 19 0.17 14 7.8 32 2.0 Canada 0.5 4 0.34 1 16.4 18 France 0.2 33 0.10 34 10.7 26 2.5 Germany 0.2 23 0.16 17 14.6 21 Italy 0.2 28 0.13 27 18.2 16 3.0 NL 0.2 25 0.16 17 7.2 34 Water UK 0.2 32 0.12 30 12.5 23 Sustainable Climate Oceans Biodiversity Production Spain 0.2 27 0.13 27 14.7 20 US 0.4 6 0.24 6 7.9 31 Ireland OECD Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: OECD, EPA RHS shows the average distance the country needs to travel to reach each SDG. O indicates 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 49#50Irish Sovereign Green Bonds (ISGB) Cumulative €6.31bn allocated to green projects following third year €6.85bn nominal outstanding (€7.35bn cash equivalent) €3,000 • Circa €1.0bn remains to be allocated to eligible expenditure in 2021 €2,500 Issuance through both syndicated sales and auctions €2,000 Pipeline for eligible green expenditure remains strong €1,500 • Launched 2018 and based on ICMA Green Bond Principles - Use of proceeds model Governed by a Working Group of government departments and managed by the NTMA €1,000 Compliance reviews by Sustainalytics €500 Three annual allocation reports and two annual impact reports now published €0 ISGB 2020 Allocation Report ISGB 2019 Impact Report Allocation Єmillion Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 2017/8 2019 2020 50 50#51Irish Sovereign Green Bonds (ISGB) Irish Sovereign Green Bond Impact Report 2019: sample impacts . • Some highlights from the report* Built Environment/ Energy Efficiency • Energy saving (GigaWattHours) : 621.06 Number of homes renovated: 24,777 EV home charger grants provided: 2,548 Clean Transportation ⚫ Number of public transport passenger journeys: 294.6 . million Greenway users: 1,196,428** Take-up of Grant Schemes/Tax foregone provided (number of vehicles): 24,122 Climate Change Adaptation • 13 major Flood relief projects at planning, development or construction phase. • 6,685 properties protected on completion Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Allocation of ISGB funding has focused on Water/Waste management and transportation Sustainable water and wastewater management 30% Mgmt of natural resources 8% Built Environment/ energy efficiency 5% Clean transportation 54% Climate change adaptation 3% *For a more detailed break-down please see the ISGB 2019 Impact Report ** Raw count from 3 longest Greenways- Waterford, Old Rail Trail, Royal Canal Greenway 51#52Irish Sovereign Green Bonds (ISGB) Irish Sovereign Green Bond Impact Report 2019: sample impacts cont. Some highlights from Report* ▸ Environmentally Sustainable Management of Living Natural Resources and Land Use Number of hectares of forest planted: 3,550 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: 36 SEAI Research & Innovation awards: 46 ▸ Sustainable water and wastewater management Water savings (litres of water per day): 160 million New and upgraded water and wastewater treatment plants : 14 Length of water main laid (total): 393km Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency GOOD HEALTH AND WELL-BEING W AFFORDABLE AND CLEAN ENERGY ZERO HUNGER INDUSTRY. INNOVATION AND INFRASTRUCTURE SUSTAINABLE CITES AND COMMUNITIES NO 1 POVERTY ** 15 ON LAND LIFE CLEAN WATER 13 AND SANITATION CLIMATE Irish peatlands; Clara Boardwalk *For a more detailed break-down please see the ISGB 2019 Impact Report 52 52#531.0 1.5 2.0 2.5 3.0 Poverty Food Health 0.0 0.5 Education Gender equality Water Energy Economy Infrastructure Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: OECD (2019) Ireland 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 Ireland compares well to OECD on "S&G" Based on the 17 Sustainability and Development Goals of the UN Oceans Biodiversity !!!! Sus. production Climate 53 53 Institutions Implementation#54NTMA Best Practice NTMA aiming to be a domestic leader in ESG NTMA-wide Objective of making the NTMA the most sustainable public service workplace in Ireland - Strategy goal of becoming an environmentally sustainable and net zero emissions organisation by 2030. Our office building has achieved an A3 BER rating and LEED Platinum certification. Working on collating agency wide data as we seek to baseline our current emissions ahead of delivering Net Zero commitment Established a NTMA Sustainability Group which supports the delivery of climate initiatives across the NTMAS mandates and drives the NTMA's Climate Action Strategy. • . • ISIF Goal to reduce carbon intensity of the global portfolio by 50% by 2025. In the Irish portfolio the strategy is two-fold; NDFA help Ireland meet its emissions targets by 2030 by investing in sustainable infrastructure achieve Net Zero by 2050 or earlier by investing in new technologies and business models that will underpin this transition Advising State Authorities on a number of climate related capital projects New Era Continues to progress a Climate Framework for the commercial semi-states Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 54 ...#55Structure of the Irish Economy Multinationals distort the "true" economic picture but have added resilience during Covid-19 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 55#56Multinational 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 Professional Arts & Other 1% Public sector 10% 11% services Domestic side of economy adds jobs; MNCs add GVA/high GVA wages Share of Employment (2020) Share of Wage Bill (2019) Share of Gross Weekly Earnings € (2020) (Q4 2019) Agriculture 4.5% 1% 1% N/A Industry (incl. Pharma.) 12.2% 15% 38% 916 Real estate 6% Financial & insurance Industry (incl. Pharma) Construction 6.2% 4% 2% 821 Dist., Tran, 25.4% 17% 9% 571 Hotel & Rest 38% ICT (Tech) 5.4% 9% 17% 1,241 Financial 4.5% 8% 4% 1,235 Real Estate 0.4% 1% 6% 730 4% Dist, tran, Professional 10.8% 13% 10% 810 hotel & rest 9% ICT (Tech) 18% Public Sector 25.6% 30% 11% 836 Arts & Other 5% 2% 1% 514 2020 Nominal GVA used Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO 56 56#57€0.5trn of intellectual property into Ireland Assets brought here by tech. & pharma. in recent years Ireland is now a leader in Computer Services; Exports have trebled since 2014 Enormous inflows (c. €0.5trn) of IP assets into Ireland since 2015 on the back of BEPS reforms 120 100 80 60 40 20 16.0% 12.0% 8.0% 4.0% 0.0% 300 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 €billions, Constant prices 250 200 150 100 50 0 1995-2014 2015 2016-19 Computer Services Exports (€bn) Chemical Products (€bn) % of World Computer Services Exports (RHS) % of World Chemical Products Exports (RHS) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: IMF, UN Comtrade, CSO, NTMA Economics Calculations 2015 once-off IP assets increase estimate I Fixed Capital Investment - IP assets 44 57#58Underlying economy was robust pre-Covid MNCs add real substance to IE economy Ireland's income = wages (all sectors) + domestic sectors profits + tax on MNC profits 250 Pre-Covid, Ireland had a robust underlying economy; compared favourably to EA (2008 = 100) 200 Comp of 150 Employee, MNC €101bn, 100 Sector GOS, 29% €165bn, Domestic 46% 50 0 Sector Profits, €87bn, 25% Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 | MNC Sector Profits Compensation of Employee Real GVA EA19 Source: CSO, NTMA calculations (Nominal 2020 data used in left chart) Domestic Sector Profits Real GVA ex. MNC Profits 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. 58#5930% 20% 10% 0% -10% -20% -30% Industry High value MNC activity adds to tax base Ireland revenue less impacted by Covid GDP overstates Ireland's progress but is still a reasonable barometer for Revenue, in particular CT and IT ICT Public Real Estate Agri, For, Fish Fin & Ins. Prof, Admin Construction Dist, Trans, Hotels & Rest Arts, Entertainment 1% of CT, PAYE, VAT y-o-y change in GVA (2020) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO, Revenue, NTMA Calculations Multinational sectors critical for Income tax and Corporation tax (2020 data) 100% 80% 60% 40% 20% 0% VAT PAYE CT Three taxes combined I Manufacturing (incl. Pharma) I Admin (incl. Aircraft Leasing) Other Sectors ICT (tech sector) Fin & Ins. Elasticity based on 1995-2019 data. E = (annual % change in tax)/(annual % change in growth variable 59 59#60Ireland's population helps growth potential Age profile younger than the EU average Ireland's population estimated at 5.01m in 2021: younger population than EU Ireland's population will remain younger than most of its EA counterparts 70% 60% 50% 40% 30% Japan Greece Portugal Italy Spain Germany Finland France Denmark Ireland Belgium UK 20% China Canada 10% Sweden USA World 0% <18 years 18-64 65+ 0.0 EA Ireland Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Eurostat (2020) CSO; OECD 20.0 40.0 2020 Old Age Dependency Ratio 60.0 80.0 2045 60 60#610 -50 -100 150 100 50 Latest Census data show net migration positive since 2015 - Migration improves Ireland's human capital Ireland's net migration has swung back and forth on economic performance 1987 1989 1991 1993 1995 1997 1999 2001 Immigration Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency recent slowdown due to Covid 2003 2005 2007 Emigration Source: CSO 2009 2011 2013 2015 2017 2019 2021 Net Migration Migration inflow particularly strong in highly educated cohort - work in MNCs attractive 40 30 20 10 0 -10 -20 -30 Third level Other Education Net Migration 2009-2013 annual average 2015-2021 199 61#620.06 0.04 0.02 0.00 -0.02 -0.04 -0.06 -0.08 יון France Ireland Greece Switzerland Denmark Portugal Income equality has improved Ireland's progressive system the main driver and cushioned the economy in 2020 Lower inequality (1985-2015): economic rise reduced GINI coefficient unlike others Progressive system means Ireland is around the OECD average for GINI after tax Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: IMF, OECD Italy Belgium USA Norway Japan Germany Luxembourg Netherlands Spain Canada Sweden UK Finland Austria 0.8 Lower GINI score means 0.7 more equal societyc 0.6 0.5 0.4 0.3 0.2 0.1 0 Slovakia Slovenia Czech Rep Iceland Finland Denmark Norway Belgium นอYaunH Austria Poland Netherlands France Germany Switzerland Luxembourg Italy Estoma Cand Australia Portugal Russia Japan Greece uieds Israel Latvia UK Korea Pre Taxes and Transfers GINI Coefficient (Post Taxes and Transfers) ! Chilé Mexico Turkey Costa Rica South Africa 62 62#63Ireland's Government The composition of the Dáil Éireann is evenly balanced between Government and Opposition Key information on the 33rd Dáil Éireann ▸ Leadership FF FG Greens SF Other/Ind Labour Soc-Dem S-PBP Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Houses of the Oireachtas ▸ Taoiseach: Micheál Martin (FF) ▸ Tánaiste: Leo Varadkar (FG) - (Martin and Varadkar swap roles in Dec 2022) ▸ Leader of the Opposition: Mary Lou McDonald (SF) ▸ Political groups ▸ Government (82 seats) ▸ Fianna Fáil (36), Fine Gael (34), Green Party (12) ▸ Opposition (77 seats) ▸ Sinn Féin (37), Other/Independent (22), Labour Party (7), Social Democrats (6), S-PBP (5) ▸ Voting system: Proportional representation - Single transferable vote ▸ Last election: 8 February 2020 ▸ Next election: No later than 20 February 2025 880 63#64Brexit Free trade agreement has re-routed trade patterns Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 64#65Brexit - Free Trade Agreement in place Allows for tariff free trade but non-tariff barriers will increase 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 be subject to tariffs and quotas. Under the deal, goods trade between the two blocs will remain free of tariffs. . However, goods moving between the UK and the EU will be subject to customs and other controls, and extra paperwork is expected to cause disruptions. 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 has been averted and the economic impact to Ireland will be more modest. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 99 65#66Withdrawal Agreement signed in 2019 Northern Ireland protocol within Withdrawal Agreement resolves many but not all of the land border issues The withdrawal agreement is a legally binding international treaty which works in tandem with the free trade agreement. Northern Ireland will remain 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: the customs border is "in the Irish sea". Goods crossing from Republic of Ireland to Northern Ireland will not require checks, but goods that are continuing on to the UK mainland will. Complex arrangements will be necessary to differentiate between goods going to NI and those travelling through NI to UK or vice versa. Customs checks at ports, VAT and tariff rebates and alignment of regulations will be needed. All of the island of Ireland remains in the EU's "single market" for goods, with a customs border in the Irish Sea Northern Ireland remains part of the U.K.'s customs regime but collects taxes and tariffs on behalf of the EU NORTHERN IRELAND REPUBLIC OF IRELAND Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency SCOTLAND Irish Sea U.K. WALES ENGLAND 66 99#67Impact of Brexit on Ireland likely net negative Deal means the shock is smaller & spread over longer horizon Modelled impact on output versus No Brexit baseline: FTA reduces impact significantly IE trading partners: UK important for good imports (land bridge) & services exports % of Goods Services Total total (2019) (2019) (2019) -1 Exp. Imp. Exp. Imp. Exp. Imp. -2 US 30.8 15.5 15.8 18.6 21.9 17.9 UK (ex -4 8.9 20.6 15.8 6.9 13.5 10.6 NI) 567 -5 NI 1.4 1.9 n/a n/a n/a n/a -6 EU-27 37.1 36.7 29.8 19.8 32.8 23.8 -7 2020 2021 2022 2023 2024 2025 China 5.9 5.8 2.8 1.3 4.0 2.3 FTA WTO Disorderly No-Deal Other 15.9 19.4 35.9 53.4 27.8 45.5 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CBI, NTMA analysis 20 67#6830.0% NI share of total Irish 25.0% trade has jumped but remains c. 3% 20.0% 15.0% 10.0% 5.0% 0.0% 2001 2002 2003 Trading flows are changing after FTA ROI-NI trade has 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 2004 2006 2007 2008 2009 2011 2012 2013 2014 2016 2017 2018 2019 2021 Exports to NI (% of exports to UK) -Imports from NI (% of imports from UK) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO 60% 50% 40% 30% 20% 10% 0% 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 % of Irish agri exports going to UK % of other Irish goods exports going to UK 2010 2013 2016 2019 68 98#69Possible benefit: FDI inflows into Ireland Service suppliers in UK may need to re-establish in EU FDI: Ireland benefitting already ▸ Ireland could be a beneficiary from displaced FDI. The chief areas of interest are Financial services Business services Companies that have indicated jobs have or will be moved to Ireland BARCLAYS Morgan Stanley citi • IT/ new media. TD LEGG MASON GLOBAL ASSET MANAGEMENT ▸ Dublin is primarily competing with Frankfurt, Paris, Luxembourg and Amsterdam for financial services. The UK (City of London) has lost significant degree of access to EU market so there may be more opportunities in time. ► 2019 figures from the IDA have shown that at least 70 investments into Ireland have been approved since the announcement of Brexit. J.P.Morgan Goldman Sachs Bank of America Merrill Lynch Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency S&P Global Ratings BARINGS 69 69#70Property Price gains in 2021 brought about by a lack of supply and unchanged demand Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 70#71With supply hampered, prices have risen House prices plateaued before the virus hit but since have increased rapidly House prices still off previous peak in 2007 (=100) but up 13.5% year-on-year Transactions have begun to increase again after Covid lockdowns 110 100 90 80 70 60 50 40 30 2005 2006 2007 2008 2009 2010 2011 2012 2013 National Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 2014 2015 2016 2017 2018 2019 2020 Excl. Dublin Source: CSO Dublin 80000 70000 60000 50000 40000 30000 20000 10000 0 Q1 2011 Q4 2011 Q3 2012 Q2 2013 Q1 2014 Q4 2014 Q3 2015 Q2 2016 Q1 2017 Q4 2017 Q3 2018 Q2 2019 Q1 2020 Q4 2020 Q3 2021 14Q Sum of Transactions -Y-o-Y Change (RHS) 50% 40% 30% 20% 10% 0% -10% -20% 71#72Covid-19 impacted supply for 2020 and 2021 2022 may see rebound in supply Housing Completions* close to 25,000 in 2020; 20,000+ in new dwelling completions in 2021 Covid hampering supply for 2020-21 but recent housing starts show supply is responding 30000 25000 20000 15000 10000 5000 0 2015 2016 2017 2018 2019 2020 2021f 2022f I New dwelling completion Unfinished Reconnection Non-Domestic 35000 30000 25000 20000 15000 10000 5000 0 2017 2018 2019 2020 2021 2022 Starts (advanced 12 months) All connections Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: DoHPCLG, CSO, NTMA Calculations Completions (new dwellings) * Housing completions derived from electrical grid connection data for a property. Reconnections of old houses or connections from "ghost estates" overstate the annual run rate of new building. **2021 completions forecasted down 10-15% on 2020 based on market estimates, 2022 CBI Forecast 72 12#73Underlying supply demand mismatch Housing supply still well below demand - est. need at least 33K units a year units housands of housing Thou 2086 12 10 + 20 Border West Mid-West South-East South-West Dublin Mid-East Midland Average annual housing demand (2020-2030) New Dwelling Completions (last four quarters) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO; NTMA analysis Average annual housing demand (2020-2030) New Dwelling Completions (last four quarters) State 33.6 19.7 GDA 17.2 10.5 Ex-GDA 16.5 9.2 Greater Dublin Area (Dublin + Mid East) requires the majority of needed dwellings. 73#74120 100 80 60 40 20 420 Mortgage drawdowns affected by Covid Restrictions impacted drawdowns but have begun to increase since initial trough Mortgage drawdowns* (000s) rose in recent quarters after Covid-19 impact Non-mortgage transactions still important - c.50% of all transactions 2006 2008 2010 2012 2014 2016 2018 2020 Residential Investment Letting ■Mover purchaser First Time Buyers Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: BPFI; CSO *4 quarter sum used (LHS) Thousands 25 20 15 10 5 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 Non-mortgage transactions Mortgage drawdowns for house purchase Non-mortgage transactions % of total (RHS) 2020 2021 74 0% 80% 60% 40% 20%#7530% Covid-19 impact on prices coming through Inflation starting to show and rents pressure back House prices up 13.5% in the year to October 2021 Rents pressures return strongly with a y-on-y increase of 5.9% after initial Covid related softening 20% 10% 0% -10% -20% -30% 2005 2007 2009 2011 2013 2015 2017 2019 -National (Y-o-Y %) Dublin (Y-o-Y %) Ex Dublin (Y-o-Y %) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO 180 160 140 120 100 80 60 40 20 2005 2006 2007 2008 2009 2010 Rents now well above prices 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Rents (100 = 2005) Price 75#76Price valuation metrics somewhat unclear But the market is not comparable to mid 2000s ECB estimates* indicate that residential prices in Ireland are currently undervalued... ...but by OECD measures they are above long run average 60 50 650 40 30 20 10 0 -10 -20 -30 -40 60% Above zero represents overvaluation 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 2018Q1 2019Q1 Maximum Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Average Source: ECB, OECD Minimum 2020Q1 2021Q1 40% 20% 0% Deviation from average price-to-rent ratio (Q2 2021, red dot represent Q1 2008) ** -20% BG UK DN FR NL ES IE BD EA FN PT GR IT *Estimates based on methods relating to housing demand forces and asset pricing framework **Note: Measured as % over or under valuation relative to long term averages since 1980. 76 10#77Banks & other Ireland's banks well capitalised as Government begins sale of BOI shares Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency ☐ ☐ 77#78Ireland's Banking Sector Overview Less competition possible in decade to come • Banks profitable before Covid-19: income, cost and balance sheet metrics much improved. Covid impact on asset quality has been muted so far - will need to see how market sits after fiscal policy fades 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 intends to sell part of its 13.9% share in BOI. The pace of shares sold will depend on market conditions. Shares are not to be sold below a certain level. Will leave just AIB and PTSB with government involvement. An IPO of AIB stock (28.8%) occurred in June 2017. This returned c. €3.4bn to the Irish Exchequer. It was used for debt reduction. Net Interest Margin Profit before Tax 3.0% 2 2.0% 1 0 1.0% AIB BOI PTSB -1 0.0% AIB BOI PTSB -2 ■2017 2018 2019 2020 E 2021 H1 2017 2018 2019 2020 2021 H1 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 78 Source: Annual reports of banks - BOI, AIB, PTSB#79Capital ratios strengthened in last 10 years Bank's balance sheets contracted and consolidated since GFC CET 1 capital ratios (H1 2021) allow for ample forbearance in 2021/22 Loan-to-deposit ratios have fallen significantly as loan books were slashed 25% 20% 15% 200 150 100 50 10% 19.3% 17.4% 15.3% 16.4% 15.3% 14.1% 5% Loan-to- Deposit % Loans (€bn) Loan-to- Deposit % Loans (€bn) 0% CET1% (Transitional) CET1 % (Fully Loaded) AIB BOI AIB BOI PTSB Dec-10 Dec-20 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Published bank accounts Note: "Fully loaded" CET1 ratios used. Refers to the actual Basel III basis for CET1 ratios. 79 12#80Covid impact on households and firms varies Mortgage arrears continue to decline while sectorally exposed firms remain vulnerable Mortgage arrears (90+ days) have steadily declined with no 20% 15% 10% 5% noticeable Covid impact € bn Forbearance and NPL ratios of Irish SME retail bank exposures by payment break history 14 12 10 35 30 25 8 20 9 15 4 10 5 2 0% 0 13 14 15 16 17 18 19 20 21 All exposures No PB Expired PB PDH + BTL (by balance) PDH + BTL (by number) Exposure Forborne ratio (RHS) NPL ratio (RHS) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CBI; RHS underlying data from CBI Financial Stability Review 2021 II % 80 80#81Commission's ruling on Apple annulled Further appeal by EC means case continues In 2016, the European Commission had ruled that Ireland illegally provided State aid of up to €13bn, plus interest to Apple. This figure is 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 has decided to appeal to a higher court: the European Court of Justice. This process could still be lengthy. Pending the outcome of the second appeal, the €13bn plus EU interest will remain in an escrow fund. The NTMA has made no allowance for these funds in any of its planning throughout the whole process. There is no need to adjust funding plans given the decision by the General Court or by the Commission's decision to appeal. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 81 4#82Disclaimer 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 82 828