Dáil Éireann debate -
Tuesday, 23 May 2000

Vol. 519 No. 5

Written Answers. - Currency Value.

Michael Creed

Question:

57 Mr. Creed asked the Minister for Finance if he will outline his views on the decline in the value of the euro, which he put forward in discussions with colleagues attending the most recent meeting of EU Finance Ministers. [14219/00]

Liz McManus

Question:

62 Ms McManus asked the Minister for Finance his views on the fall of the euro and its impact on the Irish economy; and if he will make a statement on the matter. [14285/00]

Ivor Callely

Question:

79 Mr. Callely asked the Minister for Finance the measures he will introduce to address the decline in the euro which has resulted in an 11% fall in the external fundraising power of the Irish punt since the launch of the euro currency; the measures the social partners have considered and their involvement to help resolve current difficulties; and if he will make a statement on the matter. [14195/00]

Jim O'Keeffe

Question:

90 Mr. J. O'Keeffe asked the Minister for Finance his views on the current position of the euro; if he favours a strengthening of the currency; and the proposals he has put forward in this regard. [14258/00]

Minister for Finance (Mr. McCreevy):

I propose to take Questions Nos. 57, 62, 79 and 90 together.

As Minister for Finance I have not commented in the past on either the Irish punt exchange rate or the euro exchange rate and I do not now propose to make any specific comment on the euro exchange rate.

The euro 11 Finance Ministers and the ECB share the view that growth is now very robust in the euro area and is increasingly rooted in domestic demand. They consider that, as a consequence, the euro has potential for appreciation, firmly based on growth and internal price stability. In their view, a strong economy goes along with a strong currency.

A statement issued following the euro 11 Finance Ministers' meeting on 8 May again pointed out that the euro 11 Ministers and Commissioner Pedro Solbes and the president of the ECB share the view that growth is very robust in the euro area; an increasing number of jobs are being created.

The statement went on to say that the ECB is committed to ensure that this growth will remain non-inflationary. Ministers are determined to speed up ongoing fiscal consolidation and structural reform towards a knowledge based full employment economy according to the orientations set by the special European Council in Lisbon, thus increasing the growth potential of our economies.

The statement continued that we share a common concern about the present level of the euro, which does not reflect the strong economic fundamentals of the euro area.

The fall in the value of the euro would be expected to have an impact on the Irish economy. On the positive side, the competitiveness of Irish companies exporting to non-euro zone countries should improve, leading to higher exports and employment. On the negative side, the price of goods from outside the euro zone would rise. This increase in import prices would, in turn, be expected to put upward pressure on inflation.

In the context of the Programme for Prosperity and Fairness, it has been agreed that the Government and the social partners will monitor inflationary pressures in the economy on an ongoing basis, in the light of implementation of all of the terms of the PPF and the objective of securing the low inflationary conditions envisaged in the programme.