(Limerick West) asked the Minister for Agriculture as regards the devaluation of the punt in August: (1) the reason the punt was devalued when the Government took no decision as regards the devaluation of the Irish Green Punt; (2) the average weekly amounts, as accurately as can be stated, paid by way of monetary compensatory taxes on Irish agricultural exports since 1 August 1986; (3) to what body or agency the amounts at (2) have been paid; (4) if the amounts at (2) are a burden on the Irish economy in general and in particular to Irish farmers; and (5) if the Government will now make a demand so that these amounts can be put to use by the Irish Exchequer taking account of the fact that the taxes charged on agricultural exports have had the desired effect under the rules of the common agricultural policy.
Written Answers. - Devaluation of the Punt.
Following a request by the Government the Irish pound was devalued by 8 per cent within the European Monetary System with effect from 4 August last. As indicated by the Minister for Finance at the time the adjustment was necessary to avoid the significant loss of output and jobs which could have resulted had no action been taken following the sharp drop in the value of both the US dollar and sterling. Because of the confidential nature of this kind of operation it is not possible to apply for adjustments of agricultural conversion rates in advance of approval of adjustments within the EMS. A request to devalue the Irish agricultural conversion rates was submitted to the Commission as soon as possible after the realignment of the currency.
Under the Community's agri-monetary system negative Irish monetary compensatory amounts (MCAs) came into effect on 6 August. The purpose of MCAs is to prevent the trade distortions and irregular movement of products which could result from currency fluctuations. In our case the MCAs offset, pending devaluation of the agricultural conversion rates, the competitive advantage which would have accrued to traders as a result of the devaluation of the Irish pound. Following Council agreement to devalue these rates with effect from 22 September, MCAs were reduced to 1.2 per cent for animal products and 5.8 per cent for crop products.
MCAs collected or paid in trade form part of the Community's system of funding and are credited or debited to the Commission. In the case of MCAs collected the funds are not available to member states to use for domestic purposes. Similarly where MCAs operate as subsidies, the burden of this does not fall on the member state.
In Ireland MCAs on exports are collected by the Revenue Commissioners and I have been informed that the average weekly amount collected since 6 August has been £857,000.