asked the Minister for Finance given the situation that Irish industrial output is stagnating at a time when it is growing in Europe, and given the adverse impact of high interest rates on enterprise if he considers it appropriate to increase the availability of Exchequer guarantees in respect of low interest loans to manufacturing industry; and if he will make a statement on the matter.
Written Answers. - Exchange Rate Guarantee Scheme.
109.
Exchange rate guarantees essentially involve the taxpayer bearing risks that enable business to borrow at lower rates. While there may be short term conditions in which this is justified, it should not be systematic policy. Under a number of schemes, the Exchequer has guaranteed the exchange risk in respect of borrowings in foreign currencies by Irish manufacturing firms. The amount outstanding at end-September 1986 was some £220 million. Realised and unrealised exchange rate losses amounting to some £63 million have occurred in the operation of these schemes, the cost of which has to be met by the Exchequer. The position relating to the Exchange rate guarantee schemes is being kept under review in the light of ongoing circumstances.