asked the Minister for Finance if his attention has been drawn to an article in the media (details supplied) indicating an unrecorded outflow of £800 million from the country in 1983; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Balance of Payments Estimate.
12.
I have seen the newspaper article to which the Deputy refers. The article quotes the residual amount in the balance of payments estimate for the period from end-1982 to mid-November 1983, as set out in the Central Bank's Winter Bulletin, 1983 and it speculates on its composition. As pointed out in "Economic Background to the Budget 1984", the coverage of the statistics for the international balance of payments is being reviewed by the Central Statistics Office and the results, which should be available later this year, could require the estimates of the current account deficit for recent years to be revised. However, the revisions are unlikely to alter significantly the improvement in the trend to date.
It is significant that the Minister is acknowledging that there may be need for revision. Does he agree that the article specifically points out that there is a black hole in terms of outflows in view of the fact that the net public sector external financing has increased by £959 million, net inflows to banks have increased by £500 million and that what turns up as being an increase in external reserves of only £285 million should be an increase of over £1.1 billion? Does the Minister not acknowledge that there was an unrecorded and unexplained outflow of £800 million last year and that this is a matter of very serious concern?
I draw the Deputy's attention to the fact that the residual figure has been referred to not just in that most recent article but by the Central Bank in their autumn 1983 quarterly bulletin and by the OECD in their economic survey of Ireland. The bank pointed out in their most recent quarterly bulletin that the residual figure of necessity also reflects, as well as private capital outflows, the sum of errors in the balance of payments including the under-estimation of the current deficit due, for example, to unrecorded trade with Northern Ireland.
The emergence of a residual item of that kind in the balance of payments is not a recent development. There has been a substantial negative residual in the balance of payments statement for several years. There is possibly a wider problem of definition. It is quite a common thing to find residuals of this kind in the balance of payments figures. In some countries they are very large. The OECD recently estimated that for the world as a whole there is a discrepancy on current account balance in the order of $100 billion while on classic definitions there should be no discrepancy whatever because the flows should even out. As to the reasons for the level of the residual flow and changes in the residual flow in recent years, we could speculate about the different factors involved, for example, the narrowing of interest rate differentials vis-á-vis other countries and expectations about the likely future pattern of exchange rates, both of the punt and of other currencies.
There is also a factor which can affect this, the change in practices in relation to trade credit from suppliers. As I pointed out in my initial response to the Deputy, the existence of this residual and the composition of it is being reviewed by the CSO. I hope that some time later in the year we will have the basis on which any revisions which may be necessary in the current account deficit figures will be clarified.
While the Minister has indicated that the existence of this residual is not new this year he must acknowledge that the scale of it is altogether larger and more alarming than anything that has ever been indicated before this. Does the Minister not acknowledge that the reason for the alarming growth in this unrecorded residual is as a consequence of policies? He mentioned the unrecorded trade with Northern Ireland, which everyone is very much aware of, the repatriation of profits by multinationals because of the bad investment climate here ——
That is more like an argument.
——and money being transferred illegally out of the country because of the hopeless investment climate.
That is an argument.
Does the Minister not acknowledge that all of this is confirmed by the fact that the level of investment in this country last year at about 22 per cent of GNP was the lowest on record for about ten years? Does that not indicate to him that the confidence required for renewing the economy is not there at this stage and the level of residue when it turns up will confirm what business people and everybody outside know, that the whole investment climate in the country has been undermined completely?
I do not accept that the level of this residual indicates uniquely or unambiguously any of the things to which the Deputy has referred. Did the Deputy give any consideration to the reason why the residual here, for example, doubled between 1979 and 1980? Had he any brilliant observations to offer at that time?
Will the Minister give the figures?
I do not accept either ——
Will the Minister give the precise figures?
——that the reasons the Deputy has brought forward for the deficit are only those to which he has referred. I would remind the Deputy that if he continues making speeches like that they will become something in the nature of a self-fulfilling prophecy. The Deputy has probably done more in the last few months to damage business confidence in the country than anybody has done for years.
May I ask the Minister——
The Deputy will have to find another way of dealing with this.
The Minister has actually charged me with undermining more than any other person——
Charges are not permissible at Question Time but they are inclined to develop when we depart from the rules governing Question Time.
It is a matter of judgment whether that allegation of the Minister is true. It is sad that a Minister would say that. Does he not acknowledge that this particular Deputy has not made any comment on the bond washing, which is referred to in that article as one of the elements involved? Does the Minister not recall that when he charges me with irresponsibility that his Taoiseach — I am not so sure that the Minister had responsibility at the time — after my budget indicated that a very small drop in the price of gilts the following day was evidence of a total undermining of confidence in the country? That is what they said that day but what has happened now is very much more serious. I, as spokesman for Finance for my party, have not even made any critical comments. The Minister should never again accuse me of any degree of irresponsibility like that. He should go back to his Taoiseach.