andMr. P. Barry asked the Taoiseach if he will identify the separate elements in the value of the 3 per cent subsidy and the value of the three year moratorium on capital repayments as referred to by him in An Dáil on Thursday, 7 December 1978.
204.
Written Answers. - European Monetary System.
203.
Dr. FitzGerald
Dr. FitzGerald
andMr. P. Barry asked the Taoiseach the source from which the proposed “soft” EEC loan in connection with the EMS is to come, and the proportion of this loan which would come from (i) EIB, (ii) Ortoli facilities, and (iii) other sources.
205.
Dr. FitzGerald
andMr. P. Barry asked the Taoiseach the extent that the proposed “soft” loan in connection with the EMS is to come from the EIB; if it will be payable for infrastructural purposes or otherwise; and the proportion, if any, which will be available to assist industries vulnerable under EMS conditions.
206.
Dr. FitzGerald
andMr. P. Barry asked the Taoiseach if he will give full details of the method by which discounting at 9 per cent the present value of 3 per cent interest subsidy, with a three year moratorium on capital repayments on a loan of £225 million over five years is calculated at £45 million.
I propose, with the permission of the Ceann Comhairle, to take Questions Nos. 203 to 206 together.
The European Council decided on 5 December 1978 to request the Community institutions to make available, through the new financial instrument (Ortoli Facility) and the European Investment Bank, for a period of five years, loans of up to 1,000 million EUA per year to the less prosperous member states effectively and fully participating in the exchange rate and intervention mechanism of the European Monetary System. I laid a copy of the resolution containing this decision before the House on 6 December.
The Council did not decide on how much of the loans would be provided by the Ortoli facility and how much by the European Investment Bank.
The Council requested the Commission of the EEC to submit a proposal to provide interest-free subsidies of 3 per cent for these loans, costing not more than 200 million EUA each year over the same period, that is, a total of up to 1,000 million EUA.
The interest-rate subsidies apply for the full life of the loans, expected to be 15 years.
The following table details how an interest rate subsidy of 3 per cent for 15 years would work out on the basis of a moratorium of five years for repayment of principal—repayment being assumed to be by annuity, in accordance with European Investment Bank practice. On the basis of the table the present value of the total interest-rate subsidy attracted by a loan of £100 million would be £20.1 million, giving a figure of just over £45 million for a loan of £225 million; if a moratorium of three years is assumed, the present value of the interest-rate subsidy for a loan of £100 million works out at £19.4 million or slightly less than £45 million on a loan of £225 million.
The Council's decision stated that the funds were to be concentrated on the financing of selected infrastructural projects and programmes with the understanding that any direct or indirect distortion of the competitive position of specific industries within member states would have to be avoided.
Following is the table:
Table
|
Loan |
Repayments |
Principal Outstanding |
3% Interest Subsidy |
Present Value of Subsidy discount- ing st 9% |
|
|
£m. |
£m. |
£m. |
£m. |
£m. |
|
|
1979 |
100 |
— |
100 |
3.0 |
2.8 |
|
1980 |
— |
— |
100 |
3.0 |
2.5 |
|
1981 |
— |
— |
100 |
3.0 |
2.3 |
|
1982 |
— |
— |
100 |
3.0 |
2.1 |
|
1983 |
— |
— |
100 |
3.0 |
1.9 |
|
1984 |
— |
— |
100 |
3.0 |
1.8 |
|
1985 |
— |
6.6 |
93.4 |
2.8 |
1.5 |
|
1986 |
— |
7.2 |
86.2 |
2.6 |
1.3 |
|
1987 |
— |
7.8 |
78.4 |
2.4 |
1.1 |
|
1988 |
— |
8.5 |
69.9 |
2.1 |
0.9 |
|
1989 |
— |
9.3 |
60.6 |
1.8 |
0.7 |
|
1990 |
— |
10.1 |
50.5 |
1.5 |
0.5 |
|
1991 |
— |
11.0 |
39.5 |
1.2 |
0.4 |
|
1992 |
— |
12.0 |
27.5 |
0.8 |
0.2 |
|
1993 |
— |
13.1 |
14.4 |
0.4 |
0.1 |
|
1994 |
— |
14.3 |
|||
|
Total |
100.0 |
33.6 |
20.1 |
Assuming repayments based on annuity over ten years at 9 per cent and made on 1 January of each year.