Dáil Éireann debate -
Wednesday, 21 Jan 1976

Vol. 287 No. 1

ACP-EEC Convention of Lomé (Contracts of Guarantee between State and European Investment Bank) Bill, 1976: Second Stage.

Minister for Foreign Affairs (Dr. FitzGerald)

I move: "That the Bill be now read a Second Time."

The second aspect of the ACP-EEC Convention of Lomé and its related internal agreements for which specific legislative authority was found to be necessary is the obligation upon the State to enter into contracts of guarantee with the European Investment Bank as provided by Article 9 of the Internal Agreement on the Financing and Administration of Community Aid. Under this article, member States of the Community undertake to act as guarantor for the bank, in proportion to their contributions to its capital, in respect of all financial commitments arising for its borrowers out of the loan contracts concluded by the bank. This guarantee is restricted to 30 per cent of the total credits opened by the bank under the loan contracts.

Ireland's share of the capital of the European Investment Bank is 15 million units of account (u.a.) out of a total of 2,025 million ua, or 0.74 per cent approximately. Under the convention and internal agreement it is proposed that the bank should provide loans amounting to 400 million ua. As the guarantee by the member States is restricted to 30 per cent of this amount the contracts of guarantee to be concluded by Ireland would be in respect of 0.74 per cent or 120 million ua, for example, 888,000 ua, or approximately £500,000 at the current value of the unit of account. This is, of course, the cumulative liability in respect of the totality of loans to be made by the bank for the duration of the convention. Under the Bill now before the House, it is provided that any payments to be made on foot of the contracts of guarantee will be made out of the Central Fund. However, as these loans will be made for productive purposes, repayment problems are not envisaged. I am advised that no such problems have ever arisen in the case of previous conventions.

The ACP-EEC Convention of Lomé (Contracts of Guarantee between State and European Investment Bank) Bill, 1976, is designed to empower the Minister for Finance to fulfil the obligations undertaken by this country under Article 9 of the internal agreement. For the reasons I mentioned earlier in relation to the Diplomatic Relations and Immunities (Amendment) Bill, it is desirable that Ireland should be in a position to ratify the Convention of Lomé as soon as possible. I would therefore ask the House to approve the Bill now before it as a matter of priority.

Mr. O'Kennedy

For the same reasons as I mentioned in accepting the urgency of the last Bill, we also give this Bill a rather speedy passage. I would hope that in view of what has happened this evening, when we have had two Bills which are of their nature so urgent, the legal advisers to the Department would give a little more thought in future to what is involved in our obligations under these conventions and would adequately notify us in advance. I always find myself somewhat compromised in a situation of this nature when I find the purposes so clearly indicated by the Minister, who has asked for an immediate response from this side, and I find it rather difficult to give that response because our obligation and function here is to examine legislation, and it is not possible to do that adequately at such short notice. This Bill might be more appropriate to the Department of Finance than Foreign Affairs and possibly it is our spokesman on Finance who should be dealing with it.

I have one query. The Minister may or may not have satisfied himself on this and the effect of my query may be helpful to what we both want. He said that under the Bill now before the House it is provided that any payments to be made on foot of the contracts of guarantee will be made out of the Central Fund. If that event arises will that mean it will be in addition to the payments which the Minister would normally make through his Department? To the extent that it will be, I welcome it.

Dr. FitzGerald

I am hoping it will not happen.

Mr. O'Kennedy

I think it means that this will be in addition to what the Minister will himself provide under the various votes—I have not today had an opportunity of seeing his Estimates. There are no grounds whatsoever for us to give anything other than the fullest support to this Bill and I do not think I need to go back on our reasons for giving that support.

Dr. FitzGerald

It seemed more sensible for me to take both Bills than to have the Minister for Finance coming in on one of them, they are so closely linked. It is the Department of Finance who are concerned with this one. The only burden that could arise here would be in the event of default, which has been shown to be highly improbable. The Deputy said he would welcome any additional moneys that might be paid out. I do not think we should welcome the possiblity of default and I doubt if that was what the Deputy intended. I know that what he meant was that any additional contributions we could make should be made. The Deputy will find when he looks through the Estimates that there is provision in the international Co-operation Vote for a sum of £1 million designed to cover principally our obligation under the Lomé Convention—our obligations other than this contingent obligation. This seems more appropriate out of voted moneys, I understand, than from the Central Fund. As the Deputy is aware, some of the forms of development aid which we are concerned with are paid from the Central Fund and it is thought proper, for reasons which are complex and which I am not at the moment briefed to explain in detail, that the basic aid should be given from voted moneys. The Deputy will find that this £1 million is somewhat greater than we had estimated to be required in the present year for the Lomé Convention but there may be other obligations of aid, arising from the EEC membership payable from voted moneys rather than the Central Fund.

I might add that I hope we will have a chance to discuss this in the House before long under some heading or another and that the Deputy will find when the full financial provisions are announced that we have met our obligations under the medium term commitment we entered into. The increase in total aid this year is something greater than that required by the formula and therefore to some extent we have caught up part of the shortfall of last year and there is no question of falling further behind.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, received for final consideration and passed.

An Leas-Cheann Comhairle

This Bill is certified a money Bill in accordance with Article 22 of the Constitution.