I assume that a “low interest EU Loan” refers to loans provided by the European Investment Bank (EIB), the bank of the European Union which is owned by the EU Member States.
Every advanced economy borrows from the international capital markets to finance its obligations and the services which its citizens require. In Ireland, the recently published Department of Finance Annual Report on Public Debt has identified that, as an overhang from the global financial crisis, outstanding public debt amounts to €42,000 for every Irish resident or a Gross National Debt of circa €215 billion as at the end of September 2018. This level is the third highest among the world’s advanced economies. Given our significant debt legacy and in an increasingly unpredictable external environment, high levels of public indebtedness increase the vulnerability of the Irish economy to possible economic shocks. As part of a proactive and prudent strategy, the National Treasury Management Agency (NTMA), as the Body responsible for managing Ireland’s National Debt, has ”locked-in” a substantial portion of our debt at the relatively low interest rates which have prevailed in recent years and also at longer maturities. By doing this, Ireland’s risk of interest rate shock exposure is reduced. It also has to be borne in mind that reducing the level of public debt and preventing the build-up of additional debt are also extremely important policy priorities. Therefore, the NTMA in coordination with the Department of Finance publishes a target range for Ireland’s planned borrowing annually, with auction schedules then released on a quarterly basis.
Both my Department and the Department of Housing, Planning and Local Government continue to engage with the EIB on the issue of support for the social and affordable housing sector. In fact, the EIB has been actively supporting Ireland in this regard through inter-mediated loans to the Housing Finance Agency. These long-term loans are made available to approved housing bodies and local authorities at competitive rates for the development of special and affordable housing. In the last five years the EIB has provided €350 million for such investment in cooperation with the Housing Finance Agency.
I am also aware that my colleague, the Minister for Housing, Planning and Local Government and senior government officials visited the headquarters of the EIB earlier this year to discuss future social and affordable housing investment in Ireland, and to explore ways to broaden EIB support for new social housing investment in Ireland.
In July 2018, a pilot project for the development of cost rental affordable housing in Inchicore was announced. I understand that discussions between the Department of Housing, Planning and Local Government and the EIB are ongoing with regard to financing options for this project. I am also aware that the Bank expects to support the first social housing investment under a dedicated PPP financing structure which will see 500 social homes built on six sites across the greater Dublin area.