#1Ireland: Growth & surplus amid economic uncertainty NTMA Investor Presentation January 2024 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 44 Structure of Irish economy - Page 53 Property & banks - Page 62 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 2#3Summary Irish economic & fiscal strength but risks from global backdrop remain Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ B#4Unemployment rate is at 4.9% - climbing in recent months but close to full employment 35 30 Economic growth of c. 2% expected Inflation/monetary policy has slowed growth Value added from ICT & pharma clear to see sectors give jobs, income and tax 250 200 150 100 50 y-o-y % MDD gives better picture of growth: Gov't forecasts 2%+ for 2023 and 2024 30 25 20 15 10 0 -5 -10 01 I I I I 95 99 03 07 11 15 19 23 -15 25 20 do 15 10 5 От EUR, billion GVA: Domestic sectors - GVA: Multinational dominated sectors Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO 05 07 09 11 13 15 17 19 21 23 - - GDP Domestic Demand Source: CSO I I I I I I 05 07 09 11 13 15 17 19 21 23 - Unemployment rate * 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 February 2022 and the standard unemployment rate elsewhere. Source: CSO#5Large government surplus expected Debt metrics all improved again in 2023 Forecasted 2024 GG surplus (2.7%) despite slowing growth Debt metrics set to improve this year again Debt to GNI* expected to fall rapidly 10 5 do -5 -10 -15 -20 N 11 175 Debt-to-GNI* (76.1% 2023f; 97% in 2019) 150 125 Debt-to-GG Revenue 100 (178% 2023f; 230% in 2019) do 75 50 25 0₁ Average interest rate (1.5% 2023f, from 2.2% in 2019) 2000 2010 2020 GGB (% GNI*) Primary Balance (% GNI*) Source: CSO, Irish Department of Finance forecasts Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Debt-to-GDP^ (41.4% 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 challenges/opportunities External environment is challenging – inflation abating but European slowdown more likely Inflation Inflation moderating in Ireland similar to other European economies. Core inflation remains elevated but consumption resilience evident in face of interest rate hikes Growth Labour market strength remained in 2023. Multinationals and healthy domestic balance sheets helping to offset impact from monetary policy Slowing growth in Europe is a headwind Fiscal Large surplus (2.7% of GNI*) expected for 2024 via exceptional CT receipts. Two new investment funds to be established. Intention to save windfall tax receipts and partially alleviate future fiscal/climate challenges. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency CO 6#7NTMA funding range for 2024 is €6bn-€10bn Funding range for 2024 is similar to 2023 when €7bn was issued Cash Fiscal surplus alongside NTMA's strategy of prefunding means Ireland has a strong cash position. The cash balance is expected to fall through 2024 as transfers to new sovereign funds occur >10 years Weighted average maturity of debt one of longest in Europe. NTMA issuance since 2022 of €14bn at WAM of 16.4 years and average interest rate of 2.13%. 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 has Ireland on a positive outlook. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 7#8Macro Economic strength in 2023 but growth has clearly moderated Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 8#9y-o-y chg Irish economy grew modestly in 2023 Consumption and employment growth still display resilience Modified Domestic Demand broadly flat in Q3 2023 but consumption still contributing positively Domestic demand projected to grow 2.2% in 2023 after growing by 9.5% in 2022 -5 -10 250505 15 10 8 00 3 -3 -8 -15 -13 I I I I I I I I I 2018 2019 2020 2021 2022 2023 2012 2014 2016 2018 2020 2022 2024 | Personal Consumption Government Spending - Modified Domestic Demand Modified Investment Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO United States United Kingdom Source: CSO, OECD, Irish Department of Finance 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. For Ireland we use modified domestic demand. For Euro Area we use Euro Area 17 per OECD data, which excludes Latvia, Lithuania and Croatia. Ireland Euro Area 9#10Most activity measures moderating MNE-impacted data volatile but many domestic indicators moderating rather than declining GDP MDD Consumption Government Spending Modified Investment Employee Compensation Multinational GVA Domestic GVA Employment Q3 2023 Q3 2022 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency y-o-y, % 9-0-9, % -10 -5 0 5 10 15 20 -8 -5 -3 0 3 5 8 10 2 year average Source: CSO, Eurostat 10 10#11High frequency data somewhat mixed Unemployment inching up but other measures modestly positive 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 6/23 7/23 8/23 9/23 10/23 11/23 -1.2 0.2 0.6 -0.1 -0.3 -1.1 0.2 -0.1 0.3 0.7 0.4 0.5 -0.4 0.3 0.4 0.5 0.6 -1.0 -0.3 -0.8 0.2 n/a Retail sales (ex motor) 4.7 5.0 4.6 4.2 4.2 4.3 4.4 4.3 4.5 4.5 4.3 4.2 4.1 4.1 4.1 4.2 4.4 4.4 4.5 4.7 4.7 4.8 Unemployment rate 0.9 0.9 0.9 0.6 0.3 0.1 0.1 0.3 0.4 0.5 0.5 0.3 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 n/a Payroll employees 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 0.5 0.4 0.5 0.3 0.3 -0.2 Headline 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 0.8 0.6 0.5 0.4 0.0 0.1 -0.1 Core HICP 0.8 0.7 0.5 House prices 0.5 0.7 0.9 1.0 0.9 0.6 0.3 0.2 0.0 -0.2 -0.5 -0.4 -0.3 0.1 0.3 0.5 0.6 0.8 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 63.7 64.5 62.2 58.8 60.4 61.9 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 51.4 50.0 52.6 52.1 49.7 52.3 2 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 2.5 2.7 2.5 2.4 2.6 4.6 Income Tax Source: CSO, Eurostat, ILCU, 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#12Investment strength fallen off Machinery and Equipment had outsized increase in 2022 EUR, billion 11 6 5 Some fallback in computer hardware, production facilities/data centres & new dwellings лили Net imports of specialised machinery for particular industries saw huge bump in Q2 2022, led to jump in mod. investment 2.0 1.8 1.5 EUR, billion 1.3 1.0 0.8 0.5 0.3 0.0 I 2015 2020 1 | 2005 2010 2000 Building & Construction - Modified Total ex. B&C Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Specialised machinery net imports Source: CSO Note: Ireland's metric is modified investment, which strips out multinational activity. Source: CSO 12#13Employment growth strong Unemployment rate low but has been rising in recent months Unemployment rate at 4.9% in December – climbing in recent months but still close to full employment 35 30 300 Employment up 12.7% on pre-pandemic as female employment surges, but growth moderating 25 20 do % 15 10 5 0 T 2005 2010 2015 Unemployment rate I 2020 Source: CSO No. of Persons, y-o-y, thousand 200 100 -100 -200 | | [ 2016 2017 2018 2019 2020 2021 2022 2023 Females Males Total 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. 13#14Signs of labour market tightness Vacancy rates across sectors falling but still elevated Vacancy rates falling compared to a year ago but still elevated from historical averages Beveridge curve suggests a tight labour market that has been loosening in recent months 0 1 Vacancy Rate, % 2 1.8 3 4 1.5 Financial & Insurance Prof, Sci & Technical Public (incl Health, Edu) Arts, Rec & Other ICT Industry Admin Services Construction Wholesale & Retail Accomm & Food Real Estate 1 year ago Average (2008 - present) Current Vacancy rate 1.3 1.0 0.8 0.5 0.3 I I I I I I 4.0 6.0 8.0 10.0 12.0 Unemployment rate 14.0 16.0 2008 2012 2013 2020 2021 - present Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Eurostat Source: Eurostat, CSO 14#15Wages are growing, but not spiralling Earnings have increased, averaging c. 4.5% in last year Outside public pay deal*, private sector earnings growth is not spiralling upwards yet Earnings growth not out of line with inflation since 2019 12 120 10 116 8 112 6 108 4 104 100 2 96 0 I I I I I I 2019 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2018 Q1 Q3 Q1 Q3 Q1 2020 2021 2022 2023 2019 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2020 2021 2022 2023 Q1 All Sectors Public Private - All Sectors Private Public HICP Inflation National Treasury Management Agency Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta * Q4 2022 average hourly earnings distorted by backdated aspect of public sector pay deal Source: CSO, Eurostat 15#16Real spending main driver of economy Consumption remains strong despite headwinds EUR, billion Real personal consumption now near pre-pandemic trend Rebound in services has been factor in most recent pick-up in consumption 33 31 29 22 27 25 23 | I | I T T 2015 2016 2017 2018 2019 2020 2021 2022 2023 Real Personal Consumption - Trend 2015-2019 Source: CSO Index, Jan 2020 = 100 100 8 8 × 8 8 8 50 70 60 80 90 140 130 120 110 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency * RHS chart indices are constant prices, seasonally adjusted T 2020 2021 2022 Retail Sales Index Services Index 2023 Source: CSO 16#17Households 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 Household savings rate has been volatile but clear households saving into financial assets since 2019 % of GNI* 175 150 133 131 125 110 100 63 67 75 49 40 40 50 25 160 76 36 38 12 0 T Household debt SME debt Public debt | 2003 H1 2008 H1 | 2013 H1 E 2023 H1 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Central Bank of Ireland, Eurostat, CSO EUR bn, 4QMA 10 5 0 -5 -10 2005 I I I 2010 2020 Financial Assets Housing Investments 2015 I Financial Liabilities I Stat Discrep/Other Savings Source: Central Bank of Ireland 17#18Harmonised inflation at 3.2% Energy and pandemic concerns easing; core inflation falling but elevated Energy prices driving headline inflation but that segment of index is clearly easing; core remaining elevated Goods inflation easing strongly on back of energy prices - services inflation could be stickier % do 10 2864 2 0 10 00 8 6 do 4 2 0 -2 -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. I I I I I 2015 2016 2017 2018 2019 2020 2021 2022 2023 Goods Services - All items Source: CSO 18#19across index Inflationary pressure pressure broad broad across Services sectors alongside utilities costs seeing price pressure Inflation has eased from a year ago in nearly all sectors Core HICP levelling off but core CPI elevated largely due to mortgage interest (which is excluded from HICP basket) HICP inflation by COICOP divisions All Items Food & Non-Alcohol Alcohol & Tobacco Clothes & Footwear Housing & Utilities Furnishings, & HH Equip Health Transport Communication Recreation & Culture 8 y-o-y % -10 -505 10 15 20 25 30 6 Education Restaurants & Hotels Misc Goods & Services CA ▲ 1 year ago 3 year average November 2023 Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 4 2 0 -2 | | | | T | T | 2015 2016 2017 2018 2019 2020 2021 2022 2023 - Core HICP - -Core CPI difference Source: CSO, Eurostat Note: RHS shows distribution of annual inflation rates across all CPI items (unweighted). 19#20Monetary tightening having effect NFC lending slowed through 2022, housing impact more on rates EUR, billion Lending to Irish NFCs similar to EA-wide loans, slowed since November 2022 300 250 200 150 100 50 -50 -100 I 2005 2010 2015 After slow initial pass-through, Irish mortgage rates rose back above EA average 4.5 15 4.0 - 13 - 10 3.5 -3 -5 853035 EUR, billion 3.0 Percent 2.5 2.0 1.5 1.0 0.5 I 2020 0.0 | I | I 2017 2018 2019 2020 2021 2022 - Ireland Euro Area -Ireland, Loans to Business, 3m rolling, rhs Euro Area, Loans to Business, 3m rolling, lhs Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: ECB 2023 Source: ECB 20 20#21Banks passing on rate hikes to businesses Rates on new lending to corporates moved earlier 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 down modestly but rates have jumped in latest data 7 81654 Percent 3 2 1 0 I I I 2008 2010 2012 2014 2016 2018 2020 2022 - Ireland Euro Area Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 2130% 1.8 1.5 EUR, billion Source: ECB 0.8 0.5 0.3 0.0 2016 2018 2020 2022 Percent 5.5 5.3 - 5.0 4.8 4.5 4.3 4.0 - 3.8 3.5 Gross new lending to SMEs, Ihs Interest rates, gross new lending to SMEs, rhs Source: Central Bank of Ireland 21 21#22External environment in 2024 Rate cuts likely in 2024 but slowing external growth a headwind for Ireland 2023 2024 Irish PMI has slipped like other economies, but services helping to keep PMI close to 50 EA Monetary Policy Higher rates impacting activity thru credit flows Rate cuts priced in 70 US Monetary Policy EU Fiscal Policy Expansionary High rates but not overtly slowing activity Less expansionary 65 60 Rate cuts priced in Index 55 US growth Energy prices Modest growth Modest growth 50 Prices pressure easing Impact unclear 45 UK growth Minimal growth Minimal growth, recession risk 40 I I Jan May Sep Euro Growth Global Inflation 0.5%-1% growth at best Disinflation trend clear Minimal growth, recession risk Moderation expected to continue 2021 Jan May Sep Jan May Sep 2022 2023 Jan - Ireland United States Euro Area Source: S&P Global Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 22 22#23OECD's BEPS process may impact FDI offering Pillar Two due for EU implementation in 2024, Pillar One - number of open issues Pillar One: proposal to re-allocate taxing rights on non- routine profits ▸ The first pillar seeks to address taxing rights. It reallocates 25% of MNE's excess profit* from jurisdictions where companies reside to the markets where user/consumers are based. ▸ This is to keep pace with digitalisation of the economy where sales can take place without taxable presence in market jurisdiction. Pillar 1 will reduce Ireland's corporation tax base. Some estimates place the hit at c. €2bn per annum by 2026. ▸ Ireland has always been fully supportive of Pillar One despite the implied cost to the Exchequer. ▸ Near final text of rules published, US holding public consultation. Open for signature in early 2024, ratification could take longer Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 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 impact on tax will not be seen until 2026 however. ▸ Ireland's rate will remain one of the lowest in EU and will continue to be competitive. The R&D tax credit enhanced in Budget 2024 to maintain net benefit for businesses. ▸ Ireland can lean on other positives; educated and young workforce, English speaking, EU access, and ease of doing business. * Excess profit is defined as group profit in excess of 10% of its revenue 23 23#24Fiscal Large surplus in 2023 on back of continued excess corporate tax Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 24 24#25Fiscal surplus in Ireland Robust revenues mean surpluses expected in short term 2024 General Government surplus expected to be c. 2.7% of GNI* Income tax (+7%) and VAT (+9%) grew in 2023, corporate tax (+5%) after some weakness in H2 10 15 0 N 10 9 % 7 816543210 -20 | I T 1995 2000 2005 2010 2015 2020 2025 2023 vs 2022 GGB (% GNI*) == Primary Balance (% GNI*) I 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 d-5 -10 -15 25 25#26Surplus compares well to others Recovery in fiscal position evident, question arises to how to manage such surpluses 2023 GG Balance (forecast, % of GDP or GNI*): Ireland current estimate at 2.7% of GNI* 3 1 -5 -7 -9 1357 -1 -3 United States Slovakia Malta Italy Belgium France United Kingdom Spain Source: IMF, Irish Department of Finance Estonia Latvia Slovenia Note: Irish forecast based on Department of Finance Budget 2024 forecasts and most recent Exchequer Returns data. Forecasts for other countries taken from IMF World Economic Outlook October 2023 Forecasts Germany Luxembourg Finland Austria Netherlands Lithuania Greece Sweden Portugal Denmark Cyprus Ireland Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 26 26#27Corporate tax grew more modestly in 2023 Government plans to places excess receipts in two investment funds (FIF/ICNF) Corporation tax revenue was €23.8bn in 2023, double 2020 level - legitimate concern receipts are transitory Underlying GGB suggests Ireland would be in small deficit in 2023 if excess Corporate Tax excluded (-0.7% of GNI*) EUR, billion 25.0 22.5 20.0 17.5 15.0 12.5 10.0 7.5 5.0 2.5 0.0 I 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 I Corporation Tax Revenue Source: Irish Department of Finance Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 8 3 -3 do -8 -13 -18 I | 1995 2000 2005 2010 2015 2020 2025 GGB (% GNI*) Underlying GGB (%GNI*) Source: CSO, Irish Department of Finance forecasts 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). 27 27#28Multinationals at core of CT payments Manufacturing the driver in last year's CT surge 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 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 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 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) 2021 2022 28 828#29New funds are a mitigant to excess CT risk Government intends to establish two new funds in the new year Future Ireland Fund (FIF) Infrastructure, Climate and Nature Fund (ICNF) ▸ The FIF will be a long-term savings fund which intends to contribute to exchequer expenditures in the decades to come (e.g., population ageing, the digital and climate transitions). ▸ The intention is for 0.8% of GDP (c. €4-6bn per annum) to be transferred to the FIF each year out to 2035. ▸ To start, €4bn of €6bn in the National Reserve Fund (NRF, or Rainy Day Fund) will be transferred into FIF. In time, the Government suggest as much as €100bn could reside in the FIF. ▸ The Funds are to be managed and controlled within the NTMA. The ICNF's mandate is to help the state meet its considerable infrastructure and green climate needs. ▸ In the past, Ireland has fallen into the trap of cutting capital investment in downturns. This fund will act as a reserve to be drawn on for capital expenditure if a downturn arises. ▸ To start the fund off, the remaining €2bn in the NRF will be transferred into the ICNF. From 2025 onwards, €2bn a year will be transferred into the ICNF from the Exchequer until it reaches its maximum size of €14bn. ▸ There will be clear rules in place on how the money can be accessed. ▸ A portion of the ICNF (c. €3bn) can be drawn down if needed to help meet climate and nature targets. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Budget 2024 29 29#30€bn 0 2 4 Budget 2024 measures amount to €14bn Most measures temporary but core spending up 7.4% in 2023 & 6.1% in 2024 Budget 2024 measures a mix of increased spending and tax cuts 6 Permanent Temporary Permanent Overview of Budget 2024 measures Core spending: €5.3bn Permanent tax cuts and credits: €1.2bn Temporary • • Non-core spending (including Ukraine and Covid) and Windfall Capital: €4.8bn Cost of Living Household and Business Supports: €1.4bn Energy Credits for Households: €0.9bn Temporary tax measures, including relief for mortgage interest, renters and landlords: €0.4bn Temporary Tax Measures Cost of Living Supports Permanent Tax Measures Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Energy Credits for Households Non-Core Spending + Windfall Capital Core Spending Source: Budget 2024 Note: The Government have a 5% spending rule as a self-imposed rule which aims to tie "core" spending to the estimated nominal growth rate of the Irish economy. 30 30#31Debt to GNI✶ likely fell below 80% in 2023 GG debt to GNI* to fall on nominal growth and surplus position Debt to GNI* likely on downward trajectory; low debt to GDP means proposed EU fiscal rules won't impact Ireland 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 2000 2005 2010 I 2015 2020 0 1995 2000 2005 2010 2015 2020 2025 Debt-to-GNI* Debt-to-GDP -Ireland, Net GG Debt % of GNI* Euro Area 19, Net GG Debt % of GDP Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO, Irish Department of Finance forecasts Source: Eurostat, CSO 31#32Alternative Debt Metrics Need to assess other metrics apart from debt to GDP when analysing debt sustainability 2023 GG debt to GDP % GG debt to GG revenue % GG interest to GG revenue % Greece Italy 161 334 7.2 140 292 8.0 France 110 212 3.3 Spain 108 251 5.6 Belgium 106 212 3.7 Portugal 103 239 4.7 UK 97 230 8.8 EA 19 91 196 3.7 EU 27 83.1 182 3.7 Cyprus 78 185 3.2 Ireland 41 (76 GNI*) 187 2.9 Austria 76 156 2.5 Slovenia 69 157 2.9 Germany 65 141 1.8 Slovakia 57 135 2.4 Netherlands 47 110 1.7 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta Source: DG ECFIN, Irish Department of Finance National Treasury Management Agency 32 32#33NTMA Funding 2024 funding range €6-€10 billion Continued flexibility in strategy Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 33#34NTMA funding range for 2024 is €6bn-€10bn Funding range for 2024 is similar to 2023 when €7bn was issued Cash Fiscal surplus alongside NTMA's strategy of prefunding means Ireland has a strong cash position. This is expected to fall through 2024 as transfers to new sovereign funds occur >10 years Weighted average maturity of debt one of longest in Europe. NTMA issuance since 2022 of €14bn at WAM of 16.4 years and average interest rate of 2.13%. 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 has Ireland on a positive outlook. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 34 ==#35Smooth maturity profile Redemptions are modest in coming years, FRNs fully repaid. 23 20 222 billion 18 15 13 10 8 5 3 Ог 2024 2025 il 2054+ 2051-53 2046-50 2041-45 2036-40 2035 2033 2031 2032 EFSM EFSF Green Other (incl. SURE) 2034 2030 2029 2028 2027 2026 Bond (fixed) Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: NTMA 35 35#36Low supply expected in coming years Redemptions are modest compared to rest of Europe Current borrowing requirements suggest NTMA issuance will Ireland's refinancing risk is low - only a third of debt is set to be similar to last two years (€bns) mature in the next five years 20 18 16 14 12 10 8 420 Percent 40 70 60 50 262 30 20 10 0₁ Average Issuance 2017-21 2022 Issuance 2023 Issuance 2024 Redemptions Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency IT EFSF ESM DE AT FR ES BE I Refinancing Risk 5Y Refinancing rate defined as debt maturing within five years divided by total debt outstanding. * EU data is EU as an issuer EU* PT Source: ESDM 36#37Borrowing 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 7 60 4 3.2 5 €15 3 do 4 10 1.5 2 m 0.8 0.9 1.1 1.1 0.9 5 1 0.2 0.2 2 0 0 1 1 1995 2000 2005 2010 2015 2020 2025 Syndication, Ihs Average yield, rhs Auction, Ihs Average Interest Rate Source: CSO Source: NTMA Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Note only auctions and syndication * EU data is EU as an issuer 37 37#38NTMA has lengthened weighted maturity Debt management strategy has extended debt profile since 2015 Benchmark issuance has extended the maturity of Government debt since 2015 Ireland (in years) compares favourably to other EU countries 20 18 16 14 12 10 086420 Years 15.0 11.6 10.9 10.8 12.5 8.8 8.7 8.3 7.9 7.7 7.6 7.2 10.0 6.9 7.5 5.0 2.5 0.0 2015 2016 2017 2018 2019 2020 2021 2022 2023 AT BE IE DK NL FR DE ES FI PT IT Gov't Debt Securities - Weighted Maturity Weighted average maturity Source: NTMA Euro area Gov't Debt Securities - Avg. Weighted Maturity Source: ECB Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 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. 38 38#39Funding needs and sources for 2024 Modest borrowing amid expected EBR surplus There is one bond redemption in 2024 (€8.1bn in March). There is also a EFSM repayment due this year. ▸ The Exchequer Borrowing Requirement (EBR) for 2024 is expected to be a surplus (hence shown as funding source). ▸ The NTMA held significant cash throughout 2023. The balance at year-end 2023 was c. €25bn. This will likely fall through 2024 as transfers to the FIF/ICNF occur. 20 18 16 64 14 Net Other, 1.0 EFSM, 0.8 Net Short- term paper, 8.0 (incl. transfers to FIF/ICNF) 12 10 EBR, 1.8 8 6 4 20 Bond Redemptions, 8.1 Bond Issuance, 8.0 Rounding may affect totals 1. Funding Requirements Sources of Funding Source: NTMA In the funding sources column, €8bn is reflected indicatively for bonds as it is the midpoint of the announced funding range. Net STP (short term paper) outflows are primarily related to the expected dissolution of National Reserve Fund and transfers to the Future Ireland Fund and Infrastructure, Climate and Nature Fund. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta 2. National Treasury Management Agency 3. EBR is the Department of Finance's Budget 2024 estimate of the Exchequer Borrowing Requirement 39#40Diverse holders of Irish debt Sticky sources account for greater than 60% Ireland roughly split 85/15 on non-resident versus resident holdings (Q2 2023) "Sticky" sources - official loans, Eurosystem, retail - make up c. 60% of Irish debt 12% 22% 30% IGB - Non-Resident Short-Term Retail 32% 3% 1% billion 250 200 150 100 58 50 01 2005 2010 2015 2020 IIGB Non-Resident Short-term Retail Total Debt IGB Resident Eurosystem Other - IGB Resident Eurosystem Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Other Source: Eurostat, ECB, Central Bank of Ireland Source: Eurostat, ECB, Central Bank of Ireland IGBS excludes those held by Eurosystem. Eurosystem holdings include SMP, PSPP, PEPP and CBI holdings of FRNs. Figures do 40 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.#41Investor base Demand for Government bonds is wide and varied Country breakdown: Average over last five syndications 7.2% 14.0% Investor breakdown: Average over last five syndications 8.5% 11.2% 22.4% 5.5% 48.8% ■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 41 * Does not include ECB. ECB does not participate on primary market under its various asset purchasing programmes#42Credit Ratings for Ireland S&P upgrade in May 2023; Ireland rated in AA category by all Rating Agency Long-term Standard & Poor's AA Fitch Ratings Moody's DBRS Morningstar Short-term Outlook/ Trend Date of last rating change A-1+ Stable May 2023 Date of next review 17th May AA- F1+ Positive Jan 2022 31st May Aa3 P-1 Stable Apr 2023 16th February AA(low) R-1 (middle) Stable Jan 2022 22nd March R&I AA- a-1 Stable Feb 2022 Q1 2024 KBRA Scope AA K1+ Stable May 2023 26th April AA- S-1+ Positive May 2021 8th March Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 42#43Apple case: Await CJEU decision General Court found in Ireland/Apple's favour; AG proposes that Court set aside this judgment 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. This case had nothing to do with Ireland's current corporate tax rate or regime. Apple appealed the ruling, as did the Irish Government. The General Court granted the appeal in July 2020, annulling the EC's ruling. The Commission then appealed to a higher court: the Court of Justice of the European Union (CJEU). The Advocate General (AG), an official adviser to the court, delivered his opinion on 9 November 2023. The AG recommended that the CJEU set aside the 2020 ruling and refer it back to the General Court for a new decision. The AG opinion does not form part of the CJEU's judgment but is considered by the Court when arriving at its final judgment. The CJEU will issue its final judgement at a later date. Pending the outcome of the legal process, 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 43#44ESG Issuance & government policy demonstrate Ireland's green commitment Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 開 ☐ ☐ 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#46Ireland's Greenhouse Gas emissions EPA report notes further measures needed to achieve emissions reduction target EPA projections indicate Ireland will fall short of the 2030 51% reduction target Mt CO2 eq 70 60 50 40 30 20 10 10 Emissions from agriculture make up a significant portion of the total In Ireland (c. 10% in EU and US) 0 F-gases, 1.2% 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 GHG emissions With existing measures With additional measures 51% reduction on 2018 levels Agriculture, 37.5% Industrial Processes, 4.0% Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Environment Protection Agency (Ireland) Note: Metric used is million tonnes carbon dioxide equivalent (Mt CO2eq) Energy Industries, 16.7% Residential, 11.4% Waste, 1.5% Manuf. Combustion, 7.5% Commercial Services, 1.3% Transport, 17.7% Public Services, 1.1% 46#47Climate 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. National Climate Objective: 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 updated 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 Target reduction by Projected** reduction 2030 vs.2018 Electricity Transport 75% 50% 2030 vs. 2018 62% 41% Buildings (Commercial and Public) 45% 50% Buildings (Residential) 40% 48% 25% 11% 25% 19% 50% 21% Industry Agriculture Other* Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency *F-gases, Petroleum Refining and Waste ** EPA Projections under the With Additional Measures scenario 47#48Climate Action Plan 2024 Pillars to tackle emissions reduction . Powering renewables .9GW onshore wind, 8GW solar and at least 5GW offshore wind by 2030 Phase out and end use of coal and peat in electrical generation •Transform flexibilit y of the electricity system by improving system services and storage capacity Building Better · Retrofit 500,000 dwellings by 2030 . Put heat pumps into 680,000 homes by 2030 . Generate 2.7TWh 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 25% . 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 bio economy Land Use • Increase annual afforestation rates to 8,000 hectares . 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 33,000 hectares of peatlands Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 48 42#49Irish Sovereign Green Bonds (ISGB) Over €10bn issued in Green; allocated to green projects following fourth year €10.35bn nominal outstanding across two bonds (€10.8bn cash equivalent) Cumulatively €10.8bn allocated 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 Five annual allocation reports and four annual impact reports now published Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Irish Sovereign Green Bond Impact Report 2021: Highlights* ▸ Environmentally Sustainable Management of Living Natural Resources and Land Use Number of hectares of forest planted: 2,016 Number of Landfill Remediation projects being funded: 70 ▸ Renewable Energy Number of companies (including public sector organisations) benefitting from SEAI Research & Innovation programmes as lead, partner or active collaborators: 143 SEAI Research & Innovation awards: 48 ▸ Sustainable water and wastewater management Water savings (litres of water per day): 222.1 million New & upgraded water and wastewater treatment plants: 12 Length of water main laid (total): 202km *For a more detailed break-down please see the ISGB 2021 Impact Report 49 49#50Irish Sovereign Green Bonds (ISGB) Irish Sovereign Green Bond Impact Report 2021 & Allocation Report 2022: sample impacts Allocation in 2022 of ISGB funding has focused on Water/Waste management and transportation Built environment/ energy efficiency, 2.3% Renewable energy total, 0.4% O Clean transportation, 61.6% Sustainable water and wastewater management, 25.9% Mgmt of natural resources, 7.6% Climate change adaptation, 2.2% . • Some highlights from the report* Built Environment/ Energy Efficiency • Energy saving (GigaWattHours): 458 Number of homes renovated: 17,187 EV home charger grants provided: 15,547 Clean Transportation • Number of public transport passenger journeys: 139.8 million Length of regional and national greenways constructed: 70km Take-up of Grant Schemes/ Tax foregone provided (number of vehicles): 33,020 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 *For a more detailed break-down please see the Irish Sovereign Green Bond Allocation Report 2022 50 50#51Further progress on 'E' and 'S' to be made Action needed in sectors like energy and healthcare Ireland ranks behind leaders like Denmark in current environmental metrics Ranked 13th out of 160 countries in the Social Progress Index but scores lower on healthcare and housing affordability 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 92 90 88 86 84 82 80 78 76 74 Norway Denmark Finland Iceland Sweden Netherlands Germany Japan Austria Ireland New Zealand Belgium United Kingdom France Italy Portugal United States Poland Source: Climate Change Performance Index; Social Progress Index 51#520 0.5 1 1.5 2 2.5 Governance typically been Ireland's strength Viewed well on many indicators focusing on sound governance and institutional strength Ireland is well positioned to tackle ESG challenges with strong Ireland ranked 9th globally on progress towards achieving the government effectiveness and large fiscal surplus Sustainable Development Goals Denmark Finland Netherlands Ireland Germany United States ■Government Effectiveness Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency United Kingdom Belgium France Portugal Spain General Government Balance (%GDP/GNI*) Italy Greece 6 100 90 4 80 70 2 60 50 0 40 -2 30 20 -4 10 0 -6 Source: Freedom House Index, OECD Sustainable development report 2022 Finland Denmark Sweden Norway Austria France Germany Ireland Estonia Switzerland UK Poland Latvia Czech Rep. Spain Slovenia SDG 2022 Index Score SDG Government Commitment & Effort Score NL Belgium Japan Portugal OECD average 52 52#53Structure 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 ☐ ☐ 53 55#54Multinational 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 4 39 Arts & Other 10 Dist, Tran, Hotel & Rest Real GVA of Employees Industry (incl Pharma) 13 14 37 ICT (Tech) 7 10 19 ICT 18 Professional 10 14 10 Dist, Tran, Hotel & Rest 24 18 10 Public Sector 30 29 10 Real Estate 0 1 6 10 Financial Construction 5 8 4 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 2023 Q3. Source: Eurostat 54 5.4#55EUR, billion €0.68trn 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 c. €170bn since 2015 Enormous inflows (c. €0.68trn) of IP assets into Ireland since 2015 on the back of BEPS 1.0 and other tax reforms 600 200 175 150 125 100 75 50 25 01 30 25 - 20 15 - 10 5 I I 0 2008 2010 2012 2014 2016 2018 2020 2022 Computer Services Exports, Ihs -Ireland % of World total, rhs €billions, Constant prices 500 400 300 200 100 0 1995-2014 2015 2016-22 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 55 59#56Underlying economy above EA average 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 Compensation of Employees 150 MNC Gross 25% 100 Operating Surplus (Profits) 52% 50 Domestic 0 ୮ Gross Operating Surplus (Profits) 23% 1995 1997 1999 2001 2003 2005 2007 MNC Sector Profits Compensation of Employee Real GVA EA19 Source: CSO, NTMA calculations (Nominal 2022 data used in left chart) 2009 2011 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. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 56 56#57% of population Ireland's population helps growth potential Age profile younger than the EU average but won't outrun aging demographics Ireland's population at 5.28m in April 2023: younger population than EU Ireland's population will age rapidly in decades to come; to remain younger than most of its EA counterparts 0 10 20 30 40 50 60 70 80 90 70 60 Japan Finland 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 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Eurostat ■2020 Old Age Dependency Ratio 2050 Source: UNDESA 57 44#58thousand Migration improves Ireland's human capital Ireland's net migration has swung back and forth on economic performance Continued inward migration led to 98k increase (c. 2%) in last year due to strong economy & UKR refugee efforts Migration inflow particularly strong in highly educated cohort - work in MNCs attractive 150 100 50 0 -50 -100 1986 1990 1994 1998 2002 2006 2010 2014 2018 2022 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 58 59#59Brexit: 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 59 59#60Windsor 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 60 60#61Trading flows are changing after FTA ROI-NI trade jumped in 2021, both imports and exports NI trade at highest level compared to overall IE-UK trade for many decades - special trade status of NI a factor 35 UK exit from single market will continue trend of lower goods trade between IE & UK 60% 30 50% 25 40% 20 15 30% 10 тличи 20% 5 10% 01 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 199 61#62Property & Banks Demand/prices still elevated nationally despite monetary policy and increased building costs Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency ☐ ☐ 62 62#63Prices up in recent years but stalling Supply hampered by the pandemic and inflation (c.33-40k units needed p.a.) Rebase, 2007 = 100 House prices up modestly y-on-y, above previous peak in 2007 - Dublin seeing prices recede in last year 110 100 90 80 70 60 50 40 2005 I T 2010 2015 2020 National Dublin Excluding Dublin Source: CSO Transaction volumes have started to slow following ECB rate Number, thousand 70 50 10 8260220 40 30 hikes 50 40 30 20 do 10 -10 -20 2012 2014 2016 2018 2020 2022 14Q Sum of Transactions, Ihs -Y-o-Y Change, rhs Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency * Some estimates have put housing needs as high as 60,000 a year over the coming decades 63 83#64Supply outlook uncertain Stronger supply in 2023 than expected but could be impacted by inflation/rates in '24 New Dwellings Completions* will likely exceed forecasts** of c. 30,000 houses for 2023 Housing starts show supply chain issues and inflation has started to weigh on development Number, thousand 30 20 15 10 3322525 0 2015 2017 2019 2021 2023 2025 New Dwelling Completion - All Connections Source: CSO Number, thousand 35 30 25 20 15 10 UT 5 | I T | I 2016 2017 2018 2019 2020 2021 2022 2023 2024 Completions (new dwellings) Starts (advanced 12 months) Source: CSO, Irish Department of Housing, Planning & Local Government Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta * National Treasury Management Agency 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 64#65Demand 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 given economy and refugees from Ukraine add demand for housing 100 862° 80 60 40 20 40 420 20 0 do -20 -40 - -60 I 2008 2010 2012 2014 2016 2018 2020 2022 100 90 Net Balance, thousand 80 70 60 50 40 30 BR322 20 First-Time Buyer Purchase, % total, lhs Mover Purchase, % total, lhs Residential Investment Letting Purchase, % total, Ihs - Total drawdowns, y-on-y %, rhs 10 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 I Net migration Natural population change Source: BPFI Source: CSO Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency *4 quarter sum used (LHS) 65 59#66Inflation normalising in construction sector Growth in material and labour costs has softened in recent months Materials inflation in the sector is past its peak but level is elevated Labour costs in construction variable but growing roughly in line with overall wage growth 25 10.0 20 15 Jo 10 5.0 0.0 di -5.0 ம -10.0 I I I I -15.0 2016 2017 2018 2019 2020 2021 2022 2023 I I I 2010 2012 2014 2016 2018 2020 2022 - Industrial Price Index (materials and wages, y-o-y %) All building materials (y-o-y %) All NACE Economic Sectors Construction Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: CSO RHS = weekly earnings on a 4Q yearly growth rate Source: CSO 66 99#67House prices continue to rise Inflation driven by strong demand, labour shortages and increased supply prices House prices up 2.3% in the year to October 2023, the lowest level of price growth recorded in almost three years Rents pressures remain strong with a y-on-y increase of 6.2% in November 30 20 10 do 0 -10 -20 -30 2010 200 3 175 2 150 125 Jo 0 100 75 50 25 I 2015 2020 T I | T I 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 90 67#68House price increases slowing Irish mortgage rates moving slower than other countries House prices have peaked in other countries but Irish prices have remained elevated Pass-through from ECB hikes to mortgage rates less than seen in other countries. Interest rates still above EA average Mortgage interest rate on new lending for house purchase 110 100 90 80 80 0.5 Finland Greece Italy Austria Luxembourg Netherlands Ireland | I Cyprus Jan Apr Jul 2022 Oct Jan Apr Jul 2023 Oct Jan Portugal Germany Euro Area Germany Sweden 1.0 1.5 2.0 2.5 3.0 - United Kingdom United States New Zealand - Ireland Source: StatCan, CBS, Nationwide, S&P Global, EUROPACE, Real Estate Norway (Eiendom Norge), REINZ, SCB, CSO, StatFin France Belgium Spain excludes revolving loans and others ▲ 1/2022 11/2023 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency 3.5 4.0 4.5 5.0 Source: ECB 68 89#69Ireland less vulnerable to rising interest rates But could pose a greater threat in the medium term HH Debt % Gross Disposable Income Low share of adjustable rate mortgage and low HH debt to income ratios- Ireland less exposed to rising interest rates 250 225 200 175 150 125 FR NO ASTL NL DK CA SE Percent ...but most mortgages in Ireland exposed to higher interest rates over the medium term 100 90 80 70 60 50 40 FI 30 UK Less vulnerable More vulnerable 20 10 IE BE JP PO 0 T 100 2015 2016 2017 2018 2019 2020 2021 2022 US DE ES 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 69 69#70Ireland'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. 41% of AIB and 57% of PTSB. Sales are likely to be ongoing as government divests from sector. Net Interest Margin Profit before Tax (€bns) 4.0% 2 1 2.0% 0 AIB BOI PTSB -1 0.0% AIB BOI PTSB -2 2019 2020 ■2021 2022 H12023 2019 2020 2021 ■2022 H12023 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency Source: Annual reports of banks - BOI, AIB, PTSB 10 70#71Capital ratios strengthened in last 10 years Bank's balance sheets contracted and consolidated since GFC CET 1 capital ratios allow for ample forbearance in 2023 Loan-to-deposit ratios have fallen in recent years as deposits 100 have increased on back of HH savings, banks leaving 17% 17% 16% 16% 15% 16.5% 15% 15.7% ឬននននននននន 90 80 70 60 50 40 30 14% 15.0% °14.7% 14.8% 14.4% 14% Loan-to- Deposit % Loans (€bn) Loan-to- Deposit % Loans (€bn) 13% CET1 % (Transitional) CET1 % (Fully Loaded) AIB BOI AIB BOI PTSB Dec-19 Jun-23 Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta Source: Published bank accounts National Treasury Management Agency Note: "Fully loaded" CET1 ratios used. Refers to the actual Basel III basis for CET1 ratios. 71 14#72Ireland's banking sector well positioned CET1 ratios are high and liquidity coverage ratio is better than EU average Common Equity Tier 1 Ratio, Percent 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 12 72#73Disclaimer 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 73