Bernard J. Durkan
Question:19 Mr. Durkan asked the Minister for Finance if any evidence exists of outflows of investment to high interest economies; and if he will make a statement on the matter. [13805/99]
Other Questions. - Investment in High Interest Economies.
High interest economies would, effectively, be economies outside the euro 11 area. Figures from the Central Bank show that in the period to end March, the latest date for which such data are available, residents deposits increased by 3.8 per cent and holding by other monetary union residents and rest of the world resident deposits declined marginally by 1 per cent and 1.5 per cent respectively. Such figures do not suggest that there is a flight of capital from the economy to high interest economies.
Movements in the level of non-resident holdings of Government bonds is another possible indicator, but data available for non-resident holdings do not distinguish between euro area and rest of the world residents. Nevertheless, the most up-to-date information available shows that non-resident holdings have been reasonably steady since the beginning of this year at 22.7 per cent, 24.4 per cent, 22.9 per cent and 23.5 per cent of outstanding bonds respectively for each of the months January to April.
If there is an outflow of funds in the future, has the Minister any proposals for corrective action to encourage people to invest in Ireland?
No. The reason is that the Government's ability to influence the flow of funds ceased with the abolition of exchange control regulations in 1992. The second reason is that as and from 1 January last the European Central Bank sets the interest rate which was set previously by the Central Bank. One of the Treaty rules setting up the European Central Bank is that nobody, including national central banks, will influence the European Central Bank in the setting of its interest rate. Therefore, there would be no such plans but it is highly unlikely that it would happen in the current climate.
I am gladdened to note in this morning's newspapers where the National Treasury Management Agency's restructuring process, which it has undertaken in recent weeks, has been outstandingly successful, reflecting that the subscription for Irish paper far exceeded even its expectations.
The Minister anticipated my question in his last remarks. As he correctly pointed out, the NTMA has been restructuring Government bonds by buying back and reissuing them. How is that proceeding? Is the process complete at this stage?
I do not have any data with me on that at present and I have not discussed it with the chief executive of the NTMA, but I just read in this morning's newspapers that it has been outstandingly successful.
I thought the Minister was in continuing contact with the NTMA.
We meet a couple of times a month but we have not met in the past two weeks when this process was being undertaken. I read in this morning's newspaper that official comments from people in the NTMA gave the figures for the transfers and it has been a bigger success than even the agency had anticipated.
Will the Minister check that and let me know?
Yes.