asked the Minister for Finance if he will state what is the estimated total amount of interest which will be earned by the investment of the equivalent of the proceeds of the dollar borrowings under the United States Loan Agreements, on the assumption that these investments will be retained until the conversion or repayment date specified.
Ceisteanna—Questions. Oral Answers. - Dollar Investments.
The equivalent of the proceeds of dollar borrowings under the United States Loan Agreements, namely £40.671 million, had been invested as follows by 31st March, 1952:-
|
£ million |
|
|
In Ways and Means Advances to the Exchequer |
40.500 |
|
In Mortgage Stock of the Agricultural Credit Corporation |
0.106 |
|
Cash Balance |
.065 |
|
£40.671 million |
Taking account of stock purchased with interest received on the investments, the American Loan Counterpart Fund holds stock of the Agricultural Credit Corporation as follows:—
|
£ |
|||
|
3% |
Mortgage Stock, |
1957/67 |
430,000 |
|
3½% |
do. |
1966/76 |
200,000 |
|
£630,000 |
|||
Interest at the rate of 1½ per cent. per annum is payable by the Exchequer on Ways and Means Advances from the American Loan Counterpart Fund up to 30th June, 1952. As from 1st July, 1952, the rate charged will be 2½ per cent. per annum, this being the rate at which the interest on the dollar borrowings will then commence to run. Provision for this Exchequer liability in respect of Ways and Means Advances of £40.5 million has been made in estimating the charge on the Central Fund in the current financial year for the service of debt.
As I explained to the Deputy on 21st instant, the present equivalent in Irish currency of the dollar indebtedness to the Government of the United States is £45,756,144 or £5,085,058 more than the Irish currency proceeds of the borrowed dollars. It is on this £45,756,144 that interest at the rate of 2½ per cent. must be paid as from 1st July, 1952. But for the previous surplus earnings by way of interest and the cash on hands of the American Loan Counterpart Fund, the charge on the Central Fund this year for dollar interest would be even greater than the amount provided for.
I cannot venture any precise estimate of the return in relief of the interest and sinking fund payments on the dollar borrowings which may be derived by the Exchequer from the uses to which the American loan counterpart moneys were put. It is not possible to segregate any particular type of expenditure as having been met from the American Loan Counterpart Fund. The previous Government did, however, associate particularly with the use of loan counterpart moneys the land rehabilitation project, expenditure under the Local Authorities (Works) Act, 1949, grants for harbour improvements and advances for minerals development (Financial Statement, 1950, Dáil Debates, Volume 120, column 1641). I find that on these and other voted "capital services" the identifiable return to the Exchequer from expenditure in 1950-51 and 1951-52 was only about one-quarter of 1 per cent. per annum. It would, on this basis, seem to be unduly optimistic to expect that the return from the expenditure of the loan counterpart moneys will relieve to any material extent the burden on the taxpayer of the interest and sinking fund payments which will extend over the period July, 1952, to December, 1983.