asked the Minister for Finance the precise terms and conditions of the £150 million loan to the Government recently arranged by the European Economic Community.
Ceisteanna—Questions. Oral Answers. - EEC Loan.
14.
The decision of the Council of the European Communities of 15th March, 1976, authorised the EEC Commission to raise four loans. The relevant particulars including the interest rates where they have been settled are as follows:—
(1) A public issue of bonds, denominated in US dollars for a principal amount of $300 million for a period of six years. The interest rate will be 8¼ per cent.
(2) A public issue of bonds denominated in Deutschemarks for a principal amount of DM 500 million for a period of seven years. The interest rate will be 7¼ per cent.
(3) A private agreement for a loan of $500 million US dollars for a period between three and four years. The probable interest rate on this loan is not yet available.
(4) A syndicated credit of $300 million US dollars with a life of five years and an interest rate of 1 per cent above the London Interbank Offering Rate for dollar deposits.
The proceeds of the loans are to be on-lent to Ireland and Italy in the proportions of three-thirteenths and ten-thirteenths, respectively. At present exchange rates Ireland's share will amount to about £155 million.
The conditions attaching to the loan to Ireland are:
(i) Growth in the central Government borrowing requirement expressed as a percentage of gross national product should be halted in 1976 and should be reduced in subsequent years.
(ii) Every effort shall be made to finance the largest possible proportion of public sector borrowing requirements by non-monetary means, such as by placing long-term securities directly with the public, and
(iii) The Irish authorities shall exercise the utmost caution to avoid any relaxation of its monetary policy for the purpose of meeting both the borrowing requirement of the Exchequer and the demand for credit in the private sector, were the latter to expand more rapidly than at present foreseen.
I take it that the Minister has told us all the conditions, there are no others?
Yes.
Is it not a fact that this is the first Irish Government in respect of whom lenders were able and, indeed, felt it necessary to impose conditions governing the fundamental economic management of the State, and whether also it is not a fact that this is what happens in business when a receiver is put in?
Off-hand I could not answer the first question correctly. It may be the first such case. This is the first loan of this kind from the European Community and the normal Community procedures in relation to its member countries operate. These normal provisions include conditions of this kind which, in our case, create no problems as they represent Government policy as it was before the question of conditions came up. It is merely an endorsement by the Community of the Irish Government's policies in these matters.
In view of the fact that this loan is being advanced under a new procedure and is the first such loan being advanced in conjunction with the loan to Italy, what does the Minister mean when he refers to "normal Community procedures"?
The procedures which the Community have established in relation to loans of this kind involve these conditions.
These conditions are being imposed for the first time.
This is the procedure set out in the relevant Council decision concerning this loan. It applies to both Ireland and Italy and is normal within a community of this kind where there are transactions between the Community and its partners. I should add that the conditions imposed in respect of Italy are of a different and stringent character and bear no relationship to the general conditions imposed in our case which correspond to the general tenor of our economic policy.
I would not take any comfort from that if I were the Minister.
Would the Minister agree that the amount of the loans and the interest rates are very attractive and helpful from our point of view?
Yes, subject, of course, to the proviso that in the case of a foreign loan our exchange rate risks are taken into account. These are justified in this case, especially in relation to the favourable interest rates.
In view of the Minister's acknowledgment of the assistance we are getting from the European Community which is sorely needed, will he now acknowledge that it is time his colleagues in the Government stopped blaming the Community and external factors for their failures at home and also acknowledge that were it not for the Community this country would be in dire straits?
I am not aware of what the Deputy is complaining about in regard to blame of that kind. In the course of negotiating arrangements with the Community there is a good deal of toing and froing and at times it is necessary for Governments to take firm positions. Normally, when that happens the Opposition in the country concerned support the Government in their firm line with the Commission in the case of argument. But in this instance the Opposition——
(Interruptions.)
——do not have the same approach.
The Minister does not seem to have grasped the import of my question. I was referring also to statements made by colleagues of his—I am not sure whether he was among them since there have been so many of these statements—laying the blame for our economic problems, notably inflation, on the conditions which exist in Europe, in other words, blaming external factors for our failures.
As framed originally the Deputy's question appears to me to suggest that the policies of the EEC were being referred to by Minister of this Government as being the cause of our problems. What the Deputy is raising now is a different question. It is the case that this country operates in the context of a world and a European economic situation which has a major impact on us because our trade, taking imports and exports together, is equivalent to 90 per cent of our GNP. Of course external conditions impinge on us. The Community's policies of the last few years have been directed at minimising the impact of the world economic crisis, both in the Community as a whole and within member countries but in the circumstances these policies could not have been totally successful and this country has suffered grievously from the impact of external conditions both in Europe and in the world outside.
Is it not true——
The time for Questions has expired.
——that our inflation is more serious than that being experienced elsewhere in Europe and that, therefore, the Minister's case falls completely?
I would not accept that.
I am calling the next business.
What the Minister is saying in effect is that the EEC is putting in the receiver.
The remaining Questions will appear on tomorrow's Order Paper.
I wonder if the supplementaries will appear on the the Order Paper.