The Taoiseach has defended the use of the proceeds from the sale of an almost 29% stake in AIB to pay down debt.

Leo Varadkar made the comments in Brussels following criticism from the Opposition that it should be used for infrastructure and housing.

"As the money was borrowed, and as it came from the National Pension Reserve Fund, the money will of course be used to repay our debt which in turn reduces our debt service costs, which is important too," he said.

"In relation with what we do with the money, some people in the Opposition are conflating different issues. 

"The money that was put into AIB in the first place was borrowed money ... so having borrowed the money we're going to use the money that we now receive from the sale to pay down our national debt and that's the appropriate thing to do. If you borrow money you can pay it back.

"Infrastructure is a different issue. We have spending ceilings. Those spending ceilings derive from the fiscal rules, derive from the Fiscal Treaty which we voted for in a referendum derived from our own domestic legislation."

We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences

Labour leader Brendan Howlin was among those who said the Government was following "the wrong strategy" by writing down debt rather than investing "in our schools and hospitals."

Mr Howlin also said the Government had sold the shares at a "bargain basement cost".

He said the fact that they had appreciated by 6% showed that a higher unit cost could have been achieved.

Mr Varadkar defended the fees paid for the transaction, saying they were in line with market rates. He also said the price set for the sale of shares was a good one.

"The market sets the price, and the market has set a very good price. As a result of that AIB is valued at €12 billion."

Fees are in line with market fees for this sort of transaction.

He said he wanted to be able to spend more on infrastructure, and that this would be part of conversations he would have with the EU institutions in the future.

Mr Varadkar also said the sale of the shares in AIB and Bank of Ireland would mean that ultimately the bank bailout would cost half of what was originally thought.

"If you take into account the money we can recover from all the shares and also other means such as dividends, preference shares and the bank levy, we now expect we can cover about €20bn from AIB.

"When the entire process is completed and all the shares are sold what that means is we'll be able to recover all of the money that was invested in AIB during the financial crisis in addition to all the money invested in Bank of Ireland. 

"We're in a very different position than we were in three or four years ago when we thought the bank bail out was going to cost €65bn.

"It looks like it's going to cost now something closer to half of that."