asked the Minister for Finance how the figure of £40,671,086 in Table V of the tables in connection with the Financial Statement, 1952, described as dollar borrowings under United States Loan Agreements, equivalent of proceeds received under the heading of Capital Liabilities of the State as of 31st March, 1952, is reconciled with the figure of £46,000,000 stated by him in Dáil Éireann on 15th May, 1952, to be due under these agreements on 13th June, 1951.
Ceisteanna—Questions. Oral Answers. - Dollar Borrowings.
It is made clear in the table to which the Deputy refers that the £40,671,086 is the "equivalent of the proceeds" of the dollar borrowings under the United States Loan Agreements. This, owing to the devaluation of September, 1949, is a lesser sum than the present equivalent in Irish currency of the dollar liability. At the present exchange rate with the United States dollar, $2.80 to the £, the amount of Irish currency required to discharge the dollar liability is £45,756,144, i.e., £5,085,058 more than the Irish currency proceeds of the borrowed dollars. It was to this important fact that I referred in Dáil Éireann on the 15th May.
Is it not true that the figure appearing in the White Paper circulated by the Minister is £40,000,000? If reference is to be had to the factor which he now employs to raise that figure to £46,000,000, must reference not also be had to the earning capacity of the £40,000,000 over the period over which the liability to repay is spread and the surplus of the one shown against the increased liability on the other side?
This money has long been spent. I do not know how the earning capacity of this £40,000,000 can be assessed. Our present sterling liability in respect of Marshall Aid loan amounts to £45,756,144. The proceeds of the loan, as they have been received here and converted into the sterling account, were valued for £40,671,086. There is a difference of £5,085,058. It was to the present size of our liability, viz., £45,756,144, that I referred in my statement on May 15th.
Is it not so that in employing the figure of £46,000,000 the Minister is looking forward over the entire period of redemption and proceeding on the assumption (1) that the fund earns no increment over the 27-year period on which payment is scheduled and (2) that there is no alteration in the relative values of sterling and dollars over that 27-year period? If he is looking forward to the end of the redemption period and describing as a liability what may have to be paid in sterling over that period, surely he must make a corresponding allowance for the interest payable on the investments in that fund, to wit, the mortgage debenture stock of the Agricultural Credit Corporation which pays, I think, 4½ per cent.——
To wit, speaking from recollection, £600,000 agricultural credit and mortgage stock. The rest, including everything which was taken by our predecessors and by us, has been lent to the Exchequer in the form of Ways and Means Advances and it is just simply juggling words to suggest that these Ways and Means Advances have any earning capacity outside what we can provide for them out of taxation.
Are the Exchequer Bonds inferior to 2½ per cent. British Consolidated Stock?
The Deputy does not realise that that money was taken——
Are they not earning 3½ per cent. per annum—which is 1 per cent. more than the Minister is liable to pay in interest to the American Government?
We are paying the earnings.
Is it the Minister's contention that the proceeds of that loan would be better invested in British Government stocks because their investment in Irish Government stocks have not any value at all?
If they were invested in British Government stocks then they would be earning so far as our Exchequer was concerned and they would be earning so far as our people were concerned but, as we have realised the British bonds and have taken the proceeds, the Ways and Means Advances now constitute a liability on our State and on our people.