(Limerick East) asked the Minister for Finance if his attention has been drawn to the difficulties being faced by certain Irish exporters as sterling continues to weaken against the Irish pound; the action he intends to take to alleviate their problems; if he will outline the Government's exchange rate policy; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Exchange Rate Policy.
16.
I am not aware that the recent weakening of sterling has created undue problems for Irish exporters generally.
The exchange rate policy of the Government remains as stated in the Programme for National Recovery and, as reaffirmed in the National Development plan. That policy is to link the exchange rate firmly to the European Monetary System. In this way, we can reduce inflationary expectations, achieve a stable low rate of inflation and, consequently, improve competitiveness.
(Limerick East): Have representations been made to the Minister, to his Department or the Department of Industry and Commerce by Irish exporters who are experiencing difficulties because of the strength of the punt against sterling?
I am not aware of any representations made to my Department in the matter. As regards the question of representations to the Minister for Industry and Commerce or agencies under his control, I cannot answer for them.
(Limerick East): I asked the Minister to state our exchange rate policies and he replied to that part of the question. Is that an open-ended commitment and will our position within the EMS be maintained regardless of the weakness of sterling and of whether the German Mark will be revalued after Christmas?
The Government's policy, as I have stated quite clearly and unambiguously, is that we are committed to linking the exchange rate firmly within the European Monetary System. That is the firm, unambiguous stance of the Government. The suggested revaluation of the Deutsche Mark has been talked about for the past three months but nobody speculates in advance of anything like that happening. However, it is well known that the French have made it quite clear that if the Germans were to revalue their currency they in turn would follow suit, so there would be no gain for anybody.
(Limerick East): May I ask a final supplementary?
I am also anxious to dispose of Question No. 18 in the Deputy's name.
(Limerick East): Can the Minister tell us if he will be prepared to consider drawing up contingency plans to help Irish exporters if the punt continues to strengthen and sterling and the Irish pound are on a par in the near future?
It is ten years, 1979, since there was parity as the Deputy is aware.
(Limerick East): We broke it.
It is interesting to take a look at what has happened since. We are not as vulnerable as we were in 1986 when a similar situation arose. The present position or a slightly worsened position should not pose as large a threat to exporters as it once might have done. Quite apart from our growing export markets elsewhere the competitiveness of industry has improved overall. In 1987 and 1988 Irish manufacturers experienced a cumulative competitive gain of about 25 per cent relative to their UK counterparts. In 1989, we expect that figure to increase by about 4 per cent. As a result of the fall in sterling, competitiveness may also be helped through lower prices for goods, particularly inputs, purchased from the UK. The Government will continue their pursuit of sound economic policies which should be conducive to fostering an environment in which exporters can compete effectively. On one side of the coin, the exporters who import a lot of raw material from the UK will benefit and on the other side, consumers and inflation will benefit. When we do all the calculations, we find we are in a much stronger position than we were in 1986 when a similar situation arose.
I hesitate to call Question No. 18 but I will do so. Priority Time is almost exhausted.