Speech by Minister for Finance Paschal Donohoe at the Ireland Strategic Investment Fund 10 year Impact Event

Check against delivery

Thank you, Gina [Moderator] and good afternoon everyone. It is a pleasure to be here today to address you as part of the Ireland Strategic Investment Fund 10 year Impact Event.

I would like to thank Frank and Nick for the invitation and I’m only sorry that my schedule didn’t allow me to be here a little earlier to witness what I am sure was an inspiring ‘fireside chat’ with Larry Fink.

I note that today’s event is being attended by representatives from Government, ISIF investees and the Advisory Community. I hope that you’ve all been having interesting and valuable discussions this morning so far and that they will continue over lunch. We all know that sometimes one of the most valuable elements of these events can be the chats had while having a bite to eat.

At the outset I want to touch briefly on the current economic and fiscal context as well as the outlook for this year and the years ahead.

At an aggregate level, the Irish economy is in reasonably good shape. Income tax receipts of €35.1 billion were collected in 2024, ahead of last year by €2.2 billion (6.6 per cent), reflecting continued strength in wages and record levels of employment.

A headline surplus well in excess of €20 billion was recorded last year. Of course, the fiscal position last year was heavily inflated by windfall taxes and the receipt of once-off revenues arising from the Court of Justice of the European Union (CJEU) ruling last September.

The public debt ratio continues to move in the right direction. Indeed, it is estimated that general government debt fell to 69 per cent of GNI* last year – significantly below pre-pandemic levels of nearly 100 per cent. It is anticipated that the debt ratio will continue to reduce this year.

That being said, there are a number of structural headwinds in sight which will present major challenges for the public finances. In particular, the “4Ds” of demographics, decarbonisation, digitisation and de-globalisation that will involve very large increases in public expenditure while, at the same time, weighing on tax revenue growth.

Recognising these challenges but also acknowledging significant investment needs in our economy, an overall budgetary package of €8.3 billion was made available for 2025 at Budget time last year, of which €6.9 billion is being allocated for public spending and €1.4 billion for taxation measures.

Budget 2025 reflected a continuation of a sensible and sustainable approach to fiscal policy that has helped to deliver a resilient economy and budget surpluses.

There are of course more immediate economic challenges, in particular the current uncertainty arising in relation to the imposition of tariffs, which we saw announced just last evening.

While we are still analysing the exact details of the measures, this is what we know so far. A baseline tariff of 10 per cent on all countries will enter into force on 5 April with individualised reciprocal tariffs due to come into effect on 9 April.

Our understanding, based on the White House announcements, is that this will mean a blanket 20 per cent tariff on all exports from the EU, including Ireland to the US from 9 April.

Let me just say at the outset. This is a deeply regrettable announcement. Tariffs are economically destructive; they drive up the cost of doing business and put upward pressure on prices for consumers, all the while creating uncertainty for investment and future growth. What is worse, they hurt all sides in the process.

Free trade has been at the centre of the Irish and European economies for many decades. However, it is clear that the global economic landscape is changing and the ‘new normal’ will most likely be very different from what we have been used to for many years.

Recent analysis jointly published by my department and the ESRI gives a first glimpse into the potential impacts of tariffs under a range of scenarios. Depending on the scenario, as well as future counter-measures, Modified Domestic Demand would be between 1-2 per cent below a non-tariff baseline level over the medium term.

It is important to stress that there is still considerable uncertainty in relation to the likely evolution of the global tariff landscape. We need to understand to what degree today’s measures will be permanent, and what the EU and global response will be, in order to fully assess the potential impacts.

The next step, of course, will be to see how we can take action, both at a domestic and EU level to minimise the impacts of these measures.

We will continue to work with the urgency that is required to assess how these specific announcements will impact various sectors across the Irish economy. Indeed, we have been in close contact with companies in export-intensive sectors in recent weeks. The Government Trade Forum is due to meet tomorrow, providing an opportunity for direct communication between Government and business representatives to discuss the fallout from these tariff announcements.

The Taoiseach, Tánaiste and I, as well as other members of Government, have been, and will continue to be, engaged in extensive discussions at both EU and euro area levels to put forward our views on the next steps for the trading bloc in relation to the appropriate response.

We need to take sufficient time to analyse the potential impacts of any counter-measures, while ensuring they are proportionate.

We will also continue to stress to our US counterparts - at every available opportunity - the importance of the mutually beneficial economic relationship we - and indeed the EU - have enjoyed with the US.

Ultimately, the best way to minimise impacts on the worst-impacted sectors will be to focus on remaining a competitive economy in which to do business.

While it is true that an economy’s competitiveness depends on international policy decisions, it also depends crucially on domestic policy – something we have the power to control. We need to do all we can do to maintain Ireland’s standing as a competitive and supportive environment for inward and indigenous investment and quality employment. The response, therefore, must be to control the controllables.

It should be noted that widespread tariffs are just the latest tool used in the ongoing trend toward de-globalisation. Indeed, the move toward geo-fragmentation has been a consideration that this government has had at the centre of its policy agenda for some time now.

Specifically, the necessary actions Government has outlined and are putting in place, include addressing the major infrastructural bottlenecks in key strategic areas – energy, water, housing and transport. These are key factors for both domestic and foreign direct investment.

Investing in education, skills and training will also be key to maintaining the quality of our workforce. We must also continue to pursue a prudent approach to managing the public finances.

I am confident that if we follow such a path, Ireland will continue to remain an attractive location for both foreign and domestic investment.

Such challenges highlight the importance of Ireland reinforcing its fiscal buffers going forward.

Of course, to mitigate these risks two new-long term savings funds have already been established in the form of the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. These funds will invest windfall receipts to help prepare for the future structural and fiscal challenges that are on the horizon.

€10.5 billion split as €8.5 billion for the Future Ireland Fund and €2 billion for the Infrastructure, Climate and Nature Fund is currently invested in accordance with the interim investment strategies.

Returning to the reason that we are all here today,

As Minister for Finance, it’s a great privilege for me to be associated with this event marking 10 years of ISIF’s impact.

ISIF’s current Impact Strategy is clearly aligned with the current Programme for Government in supporting the government’s priorities across renewable energy, housing, a sustainable agri-food sector, and supporting enterprise more broadly across the economy through helping to scale indigenous businesses.

Specific examples of such aligned projects are:

Under Renewables in 2024, ISIF made a €200 million investment in Copenhagen Infrastructure V (Five), the latest Flagship fund of Copenhagen Infrastructure Partners (“CIP”). CIP is the world’s largest dedicated fund manager within greenfield renewable energy investments and invests across a range of technologies, including offshore wind, energy storage, and onshore wind and solar projects.

Under Housing and Enabling Investments in June 2024 Bank of Ireland, ISIF and Pearl Property Managers Limited (Pearl) launched the Irish Homebuilding Equity Fund (IHEF), with an initial value of €55 million to support the delivery of more than 2,500 new homes over the coming years. This fund provides housebuilders with equity investment to unlock finance for sites with planning permission and sites zoned for residential use, to support projects of 50-500 homes in urban areas across the country.

Under Food and Agriculture in 2024, ISIF invested US$65 million (€60 million) in two specialist funds operated by US venture capital firm SOSV that promote sustainable investments and bio-manufacturing. The investments include a US$32.5m commitment to SOSV’s new Ireland Bio-manufacturing Fund, which will invest in companies that locate advanced biomanufacturing or precision fermentation operations in Ireland.

Under Scaling Indigenous businesses, ISIF and ISIF-backed funds have invested more than €4 billion since inception in approximately 400 Irish businesses across a range of sectors and stages of maturity – from innovative technology and life science companies to more established SMEs and large employers in regional locations throughout Ireland.

Over the last 10 years under its “compelling and national interest theme” ISIF has ably demonstrated how it has evolved to meet emerging economic challenges; whether during Brexit or through the Pandemic Stabilisation and Recovery Fund (PSRF).

ISIF’s proven ability to deploy targeted capital across the Irish economy in a strategic way, while also leveraging domestic and international co-investment, will continue to be important to supporting the challenges faced by the economy; particularly around climate change and housing.

In conclusion, I would like to thank all those who have contributed to the development of ISIF over the last decade including the National Treasury Management Agency (NTMA) Executive Management Team and Agency Board, founding Director Eugene O’Callaghan, current Director Nick Ashmore, the ISIF Investment Committee and ISIF team members, past and present.

Ireland has been one of the fastest growing economies in Europe over the past decade. However, we do not take our economic success for granted and remain focused on meeting the economic challenges faced by the country. In this context, I see ISIF continuing to play a key role in addressing those challenges in the years ahead.

Thank you all for your attention this afternoon.