asked the Minister for Finance if he is satisfied that the form in which the official external reserves are held at present represents the form most advantageous to this country.
Ceisteanna—Questions. Oral Answers. - External Reserves.
124.
Yes. The State's external reserves are kept under continuous review and adjustments in them are made when appropriate.
What is the present position regarding the agreement to keep a certain portion of our external assets in the form of sterling balances? Is the Minister aware that many people are of the opinion that the long term outlook for the British economy is far from encouraging? Would he consider a substantial switch of our external reserves from sterling to other currencies?
As the Deputy is aware, the situation changes not merely from month to month and week to week, but from day to day and often by the hour. There have been some dramatic changes in the value of currencies even in the last three days. We have indicated our desire to have greater freedom in relation to our holding of foreign reserve assets. We are at present negotiating terms which we hope will give us greater freedom of action in the future.
Would the Minister indicate the percentage of our official external reserves which are in sterling in one form or another at present?
Our external reserves at the end of January were as follows: gold £7.6 million, special drawing rights £16.4 million, our reserve with the International Monetary Fund £15.8 million, in sterling £243.4 million, in other currencies £142.1 million. This makes a total of £425.3 million.
Does the Minister not think that in view of the very discouraging outlook for the British economy in general, and in particular the menacing situation in regard to the British balance of payments, the figure of £243 million is much too high and that a far greater diversification in our external reserves would be in our best interests at this stage?
I have already indicated to the Deputy that we have indicated our desire to have greater freedom to choose the location for our reserves. As we are at present involved in negotiations I do not think it would be desirable for me to comment any further.
Are the negotiations going on at present?
As the Deputy appreciates there was a change in the Administration in Britain this week and at the moment the negotiations have been temporarily suspended.
Would the Minister not agree that the rate of return on this large reserve is considerably lower than might be secured elsewhere?
We get a high rate of interest on our reserves in sterling and they also carry the benefit of a guarantee of a relationship with the dollar. While the £ might float downwards from time to time we do not necessarily lose out on that arrangement. Because of this special guarantee, we have to be compensated in dollar terms in respect of any loss which there may be in the value of sterling. The best thing to do is to obtain greater freedom of manoeuvre for Ireland and that is what we are proposing to gain.
Could the Minister say what the proportion of our external reserves held at present bear to the cost of yearly imports of essential goods?
I would not like to give that figure off the top of my head and I do not have it in my brief.
Could the Minister state what proportion he would regard as desirable?
I would not like to express an opinion on that.
Does £243.4 million exceed the amount that must be kept in sterling by agreement?
No, it does not.