asked the Minister for Finance if he will state the duration of the present credit squeeze; and when he expects an end to it.
Ceisteanna—Questions. Oral Answers. - Credit Restrictions.
31.
As regards the moderation in the rate of expansion of credit, the advice given in May last by the Central Bank to the Associated Banks was to the effect that during the nine months ending 31 December, 1965, the aggregate amount of their lending by way of bills, loans and advances should not expand, in relation to their resources within the State, as rapidly as during the year ended 31 March, 1965. In August last, the advice was amended so as to apply to the year ended 31 March, 1966. While it appears to the Central Bank that continued restraint will probably be necessary after 31 March, 1966, it is too early to make any firm statement on this point.
The volume of bank lending has, in fact, continued to expand this year. In the period January to August, 1965, the monthly average of bills, loans and advances was £311,110,000 as against £271,711,000 for the corresponding period last year, representing an increase of 14.5 per cent.
Is the Minister aware that some members of the British Government have stated that there will be certain credit restrictions in Britain until 1970? Does the Minister subscribe to that idea so far as this country is concerned? Is it likely that the credit squeeze may last until 1970?
I am not aware of any statement to that effect by members of the British Government. If they made such a statement, I would be surprised.
As the amount lent by the banks has increased this year, can the Minister tell us who got it? Did the Government avail of money from the banks to any greater extent this year than last year?
Mr. Lynch
We did, yes,
Then we must take it that the private sector probably got less?
I do not think that is true.
I think it is.
Can the Minister say if the increased pressure by the Government on the banks has been responsible for the situation whereby the banks have no money for the local authorities?
The truth is that by reason of the expansion in the economy generally there has been a very high, an unduly high, demand for credit, far beyond what was demanded heretofore, and beyond the current resources of the banks to advance credit.
Can the Minister say how much more did the banks advance to the Government this year than last year?
I should like to get notice of that question. I could not answer it offhand.
We will put it down for the Minister.
32.
asked the Minister for Finance what steps the Government propose to take to ensure that there will not be a diminution of building activity in coming months as a result of credit restrictions.
The White Paper on public capital expenditure which will be published at an early date will deal with, among other things, Government policy in regard to building and construction.