asked the Minister for Finance the total amount added to the cost of foreign borrowing by the devaluation of sterling this year.
Ceisteanna—Questions. Oral Answers. - Sterling Devaluation.
4.
The additional cost of servicing existing external loans due to the changes in exchange rates since 31st December, 1975, is estimated at £9 million in the current year and £23 million in 1977.
5.
asked the Minister for Finance the effective rate of interest now due on foreign loans as a result of the continuing fall in the value of sterling.
The rate is approximately 11 per cent.
6.
asked the Minister for Finance if any discussions are planned with the British Government on the emergency created by the continuing fall in the value of sterling.
No bipartite discussions with the British Government are planned on this matter. The Deputy will appreciate that the relevant issues have to be, and are in fact, considered in the wider context of the EEC and further afield. Meetings of the Council of Ministers of Finance and the Economy of the EEC have had, and will again have, discussions on all related matters.
Would the Minister not agree that, in view of the fact we are linked with sterling and that decisions which may be taken by the British Government could have very serious repercussions on this country, it would be advisable that we should know in advance and have discussions with them on decisions that they may be taking in relation to sterling?
Ireland is completely free at her own discretion to sever the £ for £ relationship between the Irish £ and the £ sterling. As no doubt any other country would make decisions in regard to its currency out of regard to its own interest, Ireland would do the same. But we must also bear in mind our position within the European Community and the relationship which exists between ourselves and the members of that Community and the consequences to ourselves of variations in the value of the Irish £. The Deputy may be assured that, while we have had no formal bipartite discussions with the British authorities, we have a continuing exchange of views about the consequences to our economies and to the European situation.
Would the Minister agree that the consequences of the fall in the value of sterling in our situation would have been a great deal worse had it not been for the foresight demonstrated by the Central Bank at an early stage in present developments in converting the great bulk of our official reserves into currencies other than sterling?
I agree that the situation as far as Ireland is concerned would have been more disadvantageous if several people, including the Central Bank and the Minister for Finance, had not had adequate foresight to anticipate some of the changes that have taken place. There have been very substantial changes in recent times which are not in keeping with the true value of the £ sterling. It is possible that adjustments may yet come about which will result in a situation in which the value of the £ will more truly reflect the position in Britain.
The Minister would agree that not sufficient credit has been given to whoever was responsible—officially it was the Central Bank—for their foresight in making that very considerable switch to other currencies when they did?
It is most certainly helpful that Ireland's foreign reserves are now held substantially in currencies other than sterling because it means that even as the cost of repayment of non-sterling loans may increase, as far as Ireland's overall economic welfare is concerned, the asset value of our external reserves is rising since such reserves are held in non-sterling currencies.