Chairperson’s Statement
2017 witnessed a strong performance across the NTMA as we continued our commercial, yet prudent strategic approach to the discharge of our business mandates.
In the area of funding and debt management, we continued our strategy of taking advantage of favourable market conditions, where possible, through pre-funding, lengthening the maturity profile of the debt and smoothing out future redemptions. A noteworthy development in 2017 was the repayment of the remainder of our IMF funding and the bilateral loans from Sweden and Denmark, and their replacement with cheaper market funding. Our strategy provides significant insurance against the possibility of rising interest rates in the coming years. The weighted average maturity of Ireland’s long-term marketable and official debt is estimated at a healthy 11.2 years at end-2017.
The ISIF earned an investment return of 4.3% in 2017 - a very satisfactory return in the current low interest rate environment, given that the majority of the ISIF assets are conservatively invested globally, pending their deployment in Ireland. Since its inception in late 2014, the ISIF has witnessed a significant improvement in the Irish economy and, consequently, a materially altered environment for investment. The ISIF investment strategy is currently being reviewed in consultation with the Minister for Finance and Public Expenditure and Reform.
The State Claims Agency’s remit has grown in recent years, with an increased number of claims under management and a significant and growing estimated outstanding liability in respect of claims, some €2.7bn at end-2017. To increase our strategic focus in this area and to maximise the expertise available to us, the Board has established an SCA Strategy Committee to provide advice and guidance on strategic and policy issues with regard to the State Claims Agency. In addition to Board and management representation, the Committee has four external members with extensive expertise at a senior level in clinical practice, legal practice, risk management and the public service. Since its establishment in August 2017, the Committee has already proved of considerable assistance to the Board in the consideration of particular strategic and policy issues.
During 2017, the NTMA operated against the supportive backdrop of a domestic economy which continued its strong and broad-based growth and also an improved economic performance at a wider eurozone level. Despite this, there can be little doubt that the risks faced by the NTMA in its funding and investment mandates have increased over the last 12 months. This is due to a number of factors including the potential impact of Brexit on the economy, our dependence on the performance of the US economy – in particular its information technology sector, potential knock-on effects in Ireland from US corporate tax reform and the impact of ECB monetary policy. The anticipated withdrawal of quantitative easing in the eurozone represents an obvious risk. These increased risks and their implications for our business strategies will form an increasing area of focus for the Board and management through the course of 2018 and beyond.
I would like to thank my fellow Board members and the members of our committees for their dedication and commitment throughout 2017 and I look forward to their continued support in the year ahead. Finally, on behalf of the Board, I would like to thank the management team and staff, led by Conor O’Kelly, for their efforts and contribution over the past year.
Willie Walsh
Chairperson
29 May 2018