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<p>The Northern Ireland Executive’s spending is funded from a variety of sources,
including the ‘block grant’ allocation from the UK Government, borrowing, and locally
raised revenue. The Northern Ireland Executive can currently borrow up to £200m per
year, up to a total of £3bn, from the UK’s National Loans Fund (NLF), through the
Reinvestment and Reform Initiative (RRI).</p><p> </p><p>Any loans from the European
Investment Bank which were additional to the NLF borrowing would, like the existing
facility, count towards the UK’s overall Public Sector Net Cash Requirement (PSNCR)
and would have the effect of increasing the overall level of public spending. For
this reason, any Northern Ireland Executive borrowing needs to be within the £200m
per year limits which are provided for within the devolved administration’s total
budgets each year. Any increases in borrowing beyond the agreed limits must be offset
by reductions in other spending to avoid adding to the overall limits on public spending
set out by the Government. Such reductions could be enforced by cuts to the ‘block
grant’ portion of NI budgets if the Northern Ireland Executive did not make other
offsetting savings.</p><p> </p><p> </p><p>It is important to recognise that bodies
other than the Northern Ireland Executive can bid for EIB loans in Northern Ireland.
In January 2014, the University of Ulster secured a £150m loan to help build its new
Belfast campus, and the Northern Ireland Finance Minister has been encouraging councils
within the new local authority structures in Northern Ireland to consider the EIB
as a source of finance for infrastructure investment.</p>
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