Dáil Éireann Debate, Tuesday - 3 February 2015
246. Deputy Robert Dowds asked the Minister for Finance if he will provide, in tabular form, the currencies which the State's financial reserves, as managed by the National Treasury Management Agency, are denominated in; if the recent major currency fluctuations have had any positive or negative impact upon the State's financial situation. [4574/15]
View answer248. Deputy Robert Dowds asked the Minister for Finance if he will provide, in tabular form, the currencies the gross debt of the State is denominated in; and if the recent major currency fluctuations have had any positive or negative impact upon the State's financial situation. [4576/15]
View answerI propose to take Questions Nos. 246 and 248 together.
At end-2014 the gross National Debt under the management of the National Treasury Management Agency (NTMA) stood at €197.1 billion. Where there are non-euro borrowings such as those from the UK Treasury and International Monetary Fund (IMF) which form part of the EU/IMF Programme of Financial Support as well as some short-term paper liabilities, the NTMA as part of its debt and risk management strategy has in place a hedging programme whereby non-euro borrowings are swapped back into euro using derivative instruments such as currency swaps and foreign exchange contracts. The aim of the hedging programme is to manage exchange rate risks and protect the Exchequer from potential currency volatility. As the vast majority of the gross National Debt is either denominated in, or swapped into, euro there is practically no impact on the value of the debt as a result of recent currency fluctuations.
The main non-euro borrowings are from the UK Treasury and International Monetary Fund (IMF) under the EU/IMF Programme of Financial Support. At end-2014 the outstanding balances on these loans were Sterling 3.2 billion and SDR 11.8 billion respectively. IMF loans are denominated in SDRs (Special Drawing Rights), an international reserve asset created by the IMF. Its value is based on a basket of four key international currencies euro, Japanese yen, pound sterling and U.S. dollar. There are also some short-term paper non-euro borrowings with outstanding balances of £0.15 billion and US $2.3 billion respectively at end-2014.
At end-2014 the Exchequer had cash and other financial asset balances of €14.8 billion. In calculating National Debt these cash and other financial asset balances are netted off Gross National Debt. With the exception of one very small US Dollar deposit, all of the cash and other financial assets are denominated in euro.
The Ireland Strategic Investment Fund follows a policy of reducing its foreign currency risk by in excess of 50%. Following this currency hedge, the Fund has approximately €1 billion worth of exposure to foreign currencies from non-Euro denominated investments. The Fund has therefore, purely from a currency perspective, benefited from the recent strengthening of foreign currencies.
