asked the Minister for Finance if his attention has been drawn to a leading British stockbroking firm's assessment as reported in the media (details supplied) that the exchange rate of the Irish pound is likely to depreciate during the second half of this year and that there will be little improvement in the balance of payments deficit which would lead to a further drain on the external reserves and necessitate further foreign borrowings; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Irish Pound Exchange Rate.
5.
Various reports of this kind are issued from time to time and it would not be appropriate for me to comment in detail on them. However, I do not accept this report's assessment as regards the exchange rate for the Irish pound. Our currency has been, and continues to be, stable within the European Monetary System and the Government are committed to protecting the stability of the exchange rate. As regards the position on the balance of payments, the external reserves and foreign borrowing, I dealt with these matters comprehensively in my budget statement on 27 February.
This report was issued by a prestigious British firm who put out reasonably accurate reports on the Irish economy before now. Presuming the Minister read the report, what does he think of their analysis of the balance of payments situation, which they said would remain at a very high figure for the remainder of the year leading to further drains on our external reserves before the end of the year? In particular what did he think of their analysis that a supplementary budget would be required by the autumn?
The balance of payments will not have any self-correcting mechanism. It is a matter within our own control in terms of our export productivity to ensure that our balance of payments will be at an acceptable level. In absolute terms it may be that the balance of payments figure might be close enough to the figure referred to in the report.
A figure of £700 million?
Yes, it may well be and as a proportion of the GNP we are concerned that it does not go beyond that. I indicated in the budget statement that we will not get an automatic adjustment. To do that we would have to introduce more severe measures than were introduced in the budget which would have brought the economy into relative depression——
What about the supplementary budget?
I do not envisage there would be a necessity for a supplementary budget in this connection.
In connection with what? Have I got a categorical assurance from the Minister?
I said in my budget statement that the necessity for a supplementary budget was based on certain implications relating to incomes and otherwise, and if it was necessary to raise further revenue to ensure that our foreign borrowing requirement was not increased, I would consider that to be——
A supplementary budget remains an eventuality?
That is something every Minister——
One facing a £700 million deficit——
My hope is that that will not happen.