asked the Minister for Finance if he has considered the feasibility of breaking the link with sterling; and if he will make a statement on the current state of the Irish pound vis-à-vis other currencies.
143.
Ceisteanna—Questions. Oral Answers. - Link With Sterling.
142.
asked the Minister for Finance if he will consider a break with sterling if there is not a positive advance soon towards a European currency.
I propose with the permission of the Ceann Comhairle, to take Questions Nos. 142 and 143 together.
All aspects of the exchange rate for the Irish pound and their implications for the economy are kept under continual review, account being taken of the location of export markets, competitiveness in trade, developments in the EEC, the position of sterling and other relevant factors. On the basis of this full and continuing review no change is considered to be warranted in the existing one-for-one relationship between the Irish pound and the pound sterling and no change is proposed. There are many advantages deriving from this relationship. The stable monetary basis which it provides for the greater part of the country's external trading and financial transactions does much to maintain confidence and to promote and facilitate trade and commerce between Britain and this country.
As regards countries other than Britain, the lower exchange rate for the Irish pound which has resulted from the floating of our currency gives our exporters a strong competitive advantage. I am glad to say that they are grasping this advantage as is evidenced by the substantial increase in their exports to non-sterling destinations over the past year or so. Tourist earnings from non-sterling sources are also being boosted. As I have previously stated in the House, it is intended that the floating of our currency will be brought to an end and that participation in the EEC's exchange rate arrangements will be resumed when the circumstances enable this to be done.
I would add that progress towards economic and monetary union in the EEC does not necessarily depend on the establishment of a common Community currency. Similarly—as will be evident from what I have already said —many questions other than that of a common EEC currency have to be taken into account in regard to the relation between the Irish pound and sterling.
The Minister, in his reply, listed the advantages of maintaining the link with sterling and I should like to ask him if he is aware that his colleague, the Minister for Industry and Commerce, in the debate yesterday referred to the disadvantage in this regard in so far as we have to pay more with the pound floating, and floating downwards, for imports from non-sterling countries and that he did not mention even one of the advantages the Minister has listed now?
The Deputy realises that the Minister for Industry and Commerce was limited in the amount of time he had to reply to yesterday's debate. If the Deputies opposite want to have a prolonged debate on the Irish link with sterling or the performance of Irish currency we would be only too happy to give it to them. I am sure Deputy Colley knows well that Irish manufacturers could be seriously disadvantaged if we were to revalue our currency in such a way as to make it possible for people to send goods into this country which by reason of any change which we would make would give them an unfair advantage over Irish producers.
I am aware of the position but am I to take it from what the Minister has stated that his colleague, the Minister for Industry and Commerce, found himself unable yesterday to mention the advantages which the Minister has mentioned because of lack of time?
That was one aspect.
If there is another reason perhaps the Minister would give it to us.
I do not know because I was not here when the Minister for Industry and Commerce was replying because I was performing my duties elsewhere.
Was the Minister for Industry and Commerce making a rather one sided presentation of that? Do I take that from the Minister's reply?
No, you cannot take that. The Deputy can take what he likes from the reply because I cannot prevent him interpreting it his way.
I asked the Minister some time ago about the situation in regard to our sterling balances and the agreement with regard to the preservation of a certain proportion of our external assets in sterling. Can the Minister indicate to the House what the present position is?
We have indicated the desire to be free to move more of our reserves out of sterling and negotiations are continuing in this matter. At the moment I am not in a position to put it any further than that.
Am I right in thinking that the agreement has run out in time and has been extended?
It was extended by six months until the end of March.
Are negotiations in regard to some new form of agreement in progress?
That is correct. My objective is very reasonable, that is, that we should be free to hold our reserves in currency or in some source of value that would retain its value. We will have more freedom to do that in the future than we had in the past, but as the Deputy is aware we have certain guarantees that our reserves which are in sterling will be related to the dollar.
During the period of the extension of the agreement is the guarantee subsisting at a rate of exchange of the dollar?
I would be happy to deal with this matter if the Deputy would put down a separate question. There are pitfalls involved in dealing with international monetary movements.
The remaining questions will appear on the Order Paper for the next sitting day.