Thomas P. Broughan
Question:51 Mr. Broughan asked the Minister for Finance his views on fears in the business community of the possibility of the punt again achieving parity, or near-parity, with sterling.
Written Answers. - Punt-Sterling Parity.
I am not aware of widespread concern among the business community along the lines referred to by the Deputy, though I have noted views expressed on behalf of exporters to the UK.
I would make a number of points in relation to such views. To begin with, the value of Sterling has been fluctuating on the foreign currency markets. While the Irish pound has appreciated against Sterling over recent months, it is still well below the level against Sterling at which it was trading after the January 1993 devaluation. Against other currencies its value is less than it was before the January 1993 devaluation and overall, i.e. on a trade-weighted basis, it is still somewhat below the level which obtained before the 1992 ERM crisis. Of course, price stability continues to be the objective of exchange rate policy and policy is not designed to target any currency or basket of currencies.
In any event the ability of industry to compete abroad does not depend solely on exchange rate levels. A key requirement is that it operate in a macroeconomic framework characterised by low inflation, low interest rates, and pay moderation. This is the environment which Governments have been providing over recent years: it is dependent on the maintenance of an exchange rate policy directed at price stability, as Ireland's is. The Government is committed to maintaining this environment.
The Government has of course also been active in other ways to improve the ability of Irish industry to compete internationally. The recently-concludedProgramme for Competitiveness and Work and the National Development Plan for the use of EU Structural Funds should prove of significant help in this regard. Many of the measures in the 1994 budget will also be of assistance to industry.