Exchequer Revenue

Dáil Éireann Debate, Wednesday - 23 January 2013

Wednesday, 23 January 2013

Questions (71, 73, 75)

Kevin Humphreys

Question:

71. Deputy Kevin Humphreys asked the Minister for Finance if he will provide the Exchequer cash balance at the end of December 2012; the source of these funds, specifically the quantum raised by the National Treasury Management Agency and the amount drawn from the Troika assuming that all tax revenues service spending, and that the cash balance is provided from borrowings, and if he is concerned at the very high costs incurred by the State in holding such large cash balances; and if he will make a statement on the matter. [3188/13]

Kevin Humphreys

Question:

73. Deputy Kevin Humphreys asked the Minister for Finance if he has considered delaying the draw down of funds from the IMF and EU funds and bilateral loans, which are being held as cash balances, until the moneys are actually required to reduce the costs of maintaining such a large Exchequer cash balance, recognising the need to raise market funds through the National Treasury Management Agency when conditions are optimal but reducing the overall cost to the State of these activities; and if he will make a statement on the matter. [3190/13]

Kevin Humphreys

Question:

75. Deputy Kevin Humphreys asked the Minister for Finance his views on recent media reports that the estimated cost of maintaining an Exchequer cash balance in excess of €20 billion results in a cost of approximately €35 million per billion euro on deposit, and that the State could find better uses for the annual sum that would be in excess of €700 million that is wasted due to this policy; if he will consider mechanisms to reduce this cost; and if he will make a statement on the matter. [3217/13]

Written answers

Minister for Finance

I propose to take Questions Nos. 71, 73 and 75 together.

At end 2012, the Exchequer had €19.3bn on hand in cash and deposits. As the proceeds of all borrowing, including borrowing under the EU-IMF Programme, as well as revenues including tax and non-tax, are lodged to the Exchequer account to fund general expenditure, it is not possible to disaggregate the balance on that account by source or derive a single robust cost figure in relation to the balances maintained.

Funds in the Exchequer are used for the ongoing payments necessary for running the State. Budget 2013 estimated that the cumulative Exchequer deficit over the years 2013-2015 would be close to €35 billion. In addition to these day-to-day costs, there are large debt redemptions that are scheduled from early 2013, including a €5.1 billion bond repayment in April 2013 and a €7.6 billion bond repayment in January 2014. The continuing budget deficits and debt redemptions must be adequately and prudently funded.

Decisions on the level of cash reserves, which are a matter for the NTMA, take account of various factors in addition to the cost of maintaining such reserves. These factors include considering the potential cost of not maintaining an adequate and prudent cash balance. This includes the risk that the Exchequer would be unable to meet its obligations and that market interest rates would possibly be higher than would otherwise be the case due to the perception that the State had a precarious liquidity position.

Exchequer cash reserves are an important component in bolstering investor confidence in Ireland as it continues on the path to full independent market access at sustainable interest rates. The EU/IMF Programme ends this year making such market access of critical importance. With regard to the drawdown of remaining funding from the EU/IMF Programme, I will continue be regularly advised by the NTMA, who manage the country’s debt, as well as my officials on Irelands debt strategy. However, it is fair to highlight that given the projected cost and duration of funding available under the Programme of external assistance, we would expect to fully draw down the remaining scheduled funds, in line with that provided for in Budget 2013 .