(Limerick East) asked the Minister for Finance the further plans, if any, he has for the relaxation of exchange controls; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Relaxation of Exchange Controls.
16.
The measures I announced in November last, and which became effective on 1 January 1988, represent the first step in what, I would hope, will be a phased relaxation of exchange controls over the coming years. It is my intention to have a further review before the end of 1988 to assess the effects of these measures and to determine what scope exists for further relaxations.
(Limerick East): Is Government policy to implement on a phased basis the total elimination of exchange controls?
Our approach is positive in regard to elimination of controls on a phased basis. Ireland has complied with the liberalisation obligations introduced to date except for certain restrictions on the purchase by residents of foreign securities. As the Deputy knows, we have a derogation from them and we got another one to the end of this year. Taking into account that the further relaxations I announced in November became operative on 1 January, we will review the whole matter again by the end of this year. In November 1987 the Commission presented proposals to the Council of Ministers which aimed to remove all remaining restrictions in eight member states — there are very few restrictions in eight of the Twelve — as soon as the necessary legislative measures can be completed. During the German Presidency they are pressing to have the measures adopted before the end of their term in June next in so far as the eight member states are concerned.
Transitional arrangements covering the new obligations are proposed for the other four member states to end-1990 for Ireland and Spain and the end 1992 for Greece and Portugal. In discussions on full liberalisation Ireland has supported the principle while highlighting the difficulties it could cause for some member states including Ireland. We are seeking to ensure that the transitional period for Ireland will be extended to 1992 which is the target envisaged in the Single European Act for the completion of the internal market. The other member states concerned are also seeking extensions of their transitional periods.
(Limerick-East): Could the Minister enumerate the benefits and the risks of total elimination of exchange controls by 1992 as he and his Department see it?
We are positive in our approach on a phased basis as the Deputy asked in his question. The main objectives of these exchange controls is to strengthen the balance of payments and external reserves, increase the capital within the State and reduce disruptive currency flows at times of exchange rate speculation, basically to protect our currency. As long as there is proper management and control of our finances there will be confidence in this economy and in our currency and therefore there will be very little need for these exchange controls. As we move to 1992 we will have full liberalisation. But we have to negotiate our way through that and have a positive approach on a phased basis.
We shall now deal with Questions nominated for priority.