asked the Minister for Finance if he will make a statement on the effect the recent fall in oil prices is likely to have on forecasts for the balance of payments in 1986 and 1987.
Ceisteanna — Questions. Oral Answers. - Oil Prices.
19.
The current working assumption of international forecasting agencies, including the OECD, is that crude oil prices will remain at about $15 per barrel from the middle of this year. On this basis, and assuming further that petroleum product prices behave sympathetically and that the dollar's exchange rate remains broadly unchanged, this country's oil import bill this year could fall as low as £500 million, little more than half the level of last year.
This will bring significant economic benefits and will accelerate the reduction in Ireland's balance of payments deficit. Most forecasters now expect the deficit to fall from some 3½ per cent of GNP on 1985 to about half that in 1986, and to remain at or below that level in 1987.
In view of the fact that crude oil prices dropped dramatically in 1986 to the levels obtaining at the first oil crisis, would the Minister acknowledge that this is a major bonanza for the Government who happen to be in office and that it requires adjustment of Government policy so that advantage will be taken of an opportunity not available to any of the Government's predecessors?
I do not know what the Deputy means by that question. In the natural course of events the drop in prices will be available to those using oil. It will be passed on through the economy to the consumers. The suggestion that the Government should step in to accelerate or decelerate oil prices is puzzling, as is the idea that the Government should become involved in some way in what is a normal change in the terms of trade. Terms of trade tend to change in different directions at different times and what can move in one's favour on one occasion can move against one subsequently. I am not quite sure it would make sense for the Government to change their policy just because of a change in the terms of trade in respect of a particular problem.
A change in policy would be welcome in any event.
I presume the Deputy is not inferring we should spend more Government money in order to accentuate the benefit.
I am not.
If he is saying we should try to reduce Government expenditure to take account of the fact that the services being bought by the Government can be bought at a lower price because of the fall in oil prices, that is something that is receiving the active attention of the Government at the present time.
I am suggesting that the Government should take the opportunity to rescue the economy from its depressed state.
The use of that kind of simplistic oratory, which means absolutely nothing, is of no benefit to economic debate here.
We must move now to questions nominated for priority Question No. 30.