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EU spending rules prevent building of more homes – Donohoe

It is “exceptionally unlikely” that Ireland will be allowed to bend European Union rules which effectively cap spending on housing, Finance Minister Paschal Donohoe has said.

Speaking last week during a press conference, Donohoe spoke on the possibility of Ireland receiving an exemption from EU spending rules which would allow the building of more houses.

“It’s exceptionally unlikely [an exemption] would be granted because of the size and scale of NAMA and the role they are playing in the delivery of homes,” he said, as reported by the Journal.ie.

NAMA – the National Asset Management Agency – was established to bail out Irish banks in the wake of the financial crisis. Donohoe said that the organisation had to operate commercially under the EU’s state aid regulations.

“Those were part of the conditions that we had to meet to establish this organisation,” he said.

“It is part of the state aid permission that underpins the existence of NAMA, there is a requirement that an organisation like this is commercially viable, that its activity be commercially viable. That is part of the conditions that we needed to meet in order for this organisation to be put in place and to be functioning for as long as it has,” he said.

Speaking at the same press event, one NAMA official said there is “stringent oversight from the European Commission under state aid.”

“When we make a decision to fund a development, its under a commercially viable basis, and we have to justify that to the European Commission. So in that basis, we’re no different to Glenveigh or Cairn Homes or Ballymore or any other big major builder, which is operating in a residential area.”

He added: “It has to make sense commercially.”

Under EU rules and treaties, states are forbidden from increasing public spending beyond their projected economic growth for the economic stability of the bloc.

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