Written Answers. - Single Currency.
Bertie Ahern
Ceist:
74
Mr. B. Ahern
asked the
Minister for Finance
the preparations, if any, being made at Government level for the advent of the single currency; if he will give details of the reports, if any, on the effect of the single currency on the business, agricultural and services sectors; and if he will give details of research, if any, conducted into the effect on those sectors of the United Kingdom remaining outside the single currency.
[19334/96]
Bertie Ahern
Ceist:
81
Mr. B. Ahern
asked the
Minister for Finance
the preparations, if any, being made in his Department for the advent of the single currency; if he will give details of the reports, if any, on the effect of the single currency on the farming sector and related industries; and if he will give details of the research, if any, conducted into the effect on those sectors of the United Kingdom remaining outside the single currency.
[19327/96]
I propose to take Questions Nos. 74 and 81 together.
As President of the EU, Ireland has the task at EU level of carrying forward the preparations necessary for the commencement of economic and monetary union (EMU) and the introduction of the single currency, the euro, with effect from 1 January 1999, the date agreed by the European Council in Madrid in December 1995 and confirmed by the European Council in Florence in June of this year. These preparations include work on the new Exchange Rate Mechanism (ERM) to help promote orderly relations between the euro and the currencies of member states not participating in economics and monetary union at the outset; on the proposals for securing budgetary stability in economic and monetary union, the so-called "stability pact"; and on the legal framework for the use of the euro. The Deputy will be aware that very satisfactory progress was made on these three items at the informal meeting of ECOFIN, the Council of Finance Ministers, which I hosted in Dublin on 20-22 September last. On foot of that progress, on 16 October the European Commission adopted and published draft Council Regulations on the stability pact and on the legal framework for the euro. As Presidency, Ireland will be ensuring that as much progress as possible is made on these items over the coming weeks so that substantive conclusions can be put to the European Council in Dublin in December.
At national level, the most important preparation being undertaken is of course aimed at ensuring that the convergence criteria for entry to economic and monetary union set out in the treaty continue to be met. As regards the general Government debt and deficit criteria, Ireland has been adjudged not to have an excessive deficit in each of the three years in which the excessive deficit procedure in the treaty has been in operation, and indeed our deficit has been well below the treaty reference value of 3 per cent of GDP every year since and including 1989. Our interest and inflation rates also meet the relevant criteria, while the Irish pound trades comfortably in the ERM. The Government intends to ensure that Ireland continues to meet the treaty criteria.
A further vital aspect of our preparations for economic and monetary union is to ensure that the Irish economy is as strong and competitive as possible. As the Deputy will be aware, the current economic climate in Ireland is characterised by high economic growth and high employment growth, low inflation, a declining debt-to-GDP ratio, a balance of payments surplus, interest rates close to historically low levels, moderate wage developments under theProgramme for Competitiveness and Work and substantial investment under the Community Support Framework. Economic prospects are bright and the Government is committed to continuing its sound management of the economy with a view to ensuring that Ireland remains competitive in the single market. The implications of economic and monetary union are being taken into account in the ongoing formulation of policy in relation to the economy and the public finances. In this way the Irish economy will stand ready not only to qualify for economic and monetary union but also to take maximum advantage of its benefits.
On the practical level, in summer 1995 my Department circulated to all Departments the European Commission Green Paper on the Practical Arrangements for the Introduction of the Single Currency and asked each Department to appoint a single currency officer. My Department chairs regular meetings of the single currency officers team, whose remit is to alert Departments to the advent of the single currency and to help ensure that they make appropriate arrangements for the changeover to it. The SCOT also includes representatives from the Office of the Comptroller and Auditor General, the Office of the Revenue Commissioners and the Central Statistics Office. The SCOT meets regularly to discuss the preparations necessary for the introduction of the single currency and to plan for them.
A sub-group of the SCOT, comprising the single currency officers of the Departments which are likely to be most affected by the changeover, was set up early in 1996, to help drive forward the work of the SCOT. The Departments of Finance, Social Welfare, Education, and Transport, Energy and Communications, as well as the Office of the Revenue Commissioners, are represented on it.
A network of single currency co-ordinators has been set up by the European Commission and my Department participates in it. Work is also ongoing in relation to planning for the timely provision of public information in relation to the changeover to the euro.
The Central Bank of Ireland is engaged in ongoing consultations with the banking and financial sector, which will have a key role in relation to the Single Currency from 1 January 1999.
As regards the involvement of the private sector generally, an informal technical working group on economic and monetary union has been set up to advise my Department on technical issues in the run-up to the 1998 Council decision on which member states qualify for economic and monetary union. The Irish Business and Employers' Confederation, the Chambers of Commerce of Ireland, the Director of Consumer Affairs, the Irish Bankers' Federation, the Irish Farmers' Association, the Irish Stock Exchange, and the Consultative Committee of Accountancy Bodies-Ireland, as well as my Department and the Central Bank of Ireland, are represented on this informal group. The group would probably from the nucleus of a more formal structure, like the Irish Decimal Currency Board which oversaw the decimalisation of the Irish pound in 1971, to overseas the practical arrangements needed to manage the transition to the euro.
With regard to the effects of the single currency on various sectors, the ESRI reportEconomic Implications for Ireland of European Monetary Union, an independent study which I commissioned earlier this year on behalf of the Government, is a comprehensive analysis of the impact of economic and monetary union on the Irish economy. A primary focus for the study was an examination of the implications of economic and monetary union for the Irish economy, including in a situation where the UK, at least initially, stayed outside the euro zone. The consultants concluded that membership of economic and monetary union, even if the UK did not join, would be beneficial, on balance, for Ireland. The ESRI report includes detailed consideration of the impact of economic and monetary union, under various membership scenarios, on the agricultural sector and the agrifood sector, as well as on the financial services, manufacturing, retail distribution and tourism sectors of the economy. A copy of the ESRI report was sent to all Oireachtas Members shortly after its publication last July.
