Vol. 345 No. 13
asked the Minister for Finance the action the Government intend to take if the Council of Ministers does not agree to extend for a further period the special EMS interest rate subsidy which applies to Ireland under the arrangements agreed when Ireland joined the European Monetary System.
8.
asked the Minister for Finance if he has investigated the impact on the Irish economy of the possible ending of the special interest rate subsidy arrangements for Ireland under the EMS system.
I propose to take Questions Nos. 7 and 8 together.
As the Deputy is aware, the special support arrangements for the less prosperous member states participating in the European Monetary System took the form of guaranteed access to subsidised loans from the European Investment Bank and the New Community Instrument for Borrowing and Lending (NIC) for the five-year period 1979-1983. Ireland and Italy were the only two member states to benefit from this Council decision. I am happy to tell the House that we have secured our full entitlement to these subsidised loans which have been concentrated mainly in helping to finance economic infrastructure.
As I have said, the Council decision which made these subsidised loans available applied to the five-year period 1979-83 only. Since coming into office I have taken every opportunity in the course of my many contacts with the Commission and the European Investment Bank of stressing the importance of the subsidised loans to this country. I was, therefore, gratified that the Commission last June made a proposal to the Council of Ministers to extend the support arrangements for a further two-year period. The Council has examined the proposal on a number of occasions and negotiations are continuing. No decision will, however, be taken until the European Parliament gives its opinion, probably at the end of the year or very early in the New Year. The House should be aware, however, that no consensus to renew the arrangements has so far emerged at Council level.
The Deputy will understand that because the issue is still under negotiation it would hardly be appropriate to concede the possibility of the subsidised loans coming to an end. My own view is that if the EMS is to be maintained and strengthened and if progress is to be made generally in promoting integration in the Community, it is essential that Community action to help to strengthen our economic potential should be continued. It is on that basis I am continuing my contacts with other member states and with the Commission.
Will the Minister indicate the capitalised value this year of the subsidies? In view of the fact that the Irish economy is in a much more serious state than it was in 1978 when the interest subsidies were negotiated at a meeting of the European Council which I attended, will the Minister not agree that he has a strong case to make to his colleagues in the Council to adopt the Commission proposal for a further extension of two years?
The annual value of the subsidies is £45 million——
That is very significant.
If we are to continue to make progress towards a greater degree of economic convergence and integration in the Community this kind of assistance should continue to be made available to member states who are specifically in our position. That has been, and will continue to be, the basis of the case I have been making to the Commission and to my colleagues, the Finance Ministers of the other member states.
Will the Minister point out to his colleagues in the Council that by comparison with 1978 when we had growth, falling inflation and falling unemployment, our situation is much different from what it was when these points were conceded at the Council? Will he point out those facts to his colleagues in the Council when they come to consider the position?
The central thrust of the statement I made on the last occasion when this matter was discussed in the European Council was much along the lines outlined by the Deputy. I made the case that, if anything, the justification for applying the subsidies is now even greater than it was when the system was instituted.
With that persuasive argument I look forward to the Minister's success in the matter.
