Tuesday, 16 December 1980
Dáil Eireann Debate
Mr. P. Barry: asked the Minister for Finance if the maintenance of the present parity of the Irish pound within the EMS is Government policy; and, if so, the measures the Government propose to take to ensure the adequacy of the external reserves of the Central Bank for this purpose.
Mr. O'Kennedy: The Government have made it quite clear that it is our firm policy to maintain the parity of the Irish pound within the EMS. The external reserves are at an adequate level for this purpose. As at end November 1980 the reserves amounted to £1,165 million, an increase of £190 million since the end of last year. It is official policy to continue to maintain the reserves at an adequate level.
Mr. O'Kennedy: The Central Bank and other independent commentators report that 2½ months' imports is adequate. There has been a significant improvement in the state of reserves and in the balance of payments.
Mr. O'Kennedy: I have already mentioned the growth in our exports and Deputy Dr. FitzGerald should know that there are a number of factors which influence the reserves, not just borrowing. As the Deputy will know the buoyancy in our exports to which I referred, which is running way ahead of what the Government originally anticipated, is making a major contribution in that area.
Dr. FitzGerald: Will the Minister say what has been the amount of foreign borrowing in the period in question, and what has been the improvement in the reserves? Will the Minister give us a straight answer?
Mr. O'Kennedy: The Exchequer borrowed £1,763 million from 1 June 1973 to 31 May 1977 and £3,075 million from 1 June 1977 to 30 September 1980. The Government proposals in relation to the level of future borrowing will be set out in the forthcoming 1981 Budget. If these borrowing figures were all expressed in the context of 1973 prices the results would be a borrowing from 1 June 1973 to 31 May 1977 of £1,339 million and a borrowing of £1,435 million from 1 June 1977 to 30 September 1980.
Mr. L'Estrange: Is it not true that our borrowing has doubled since 1977 and is it not also true that the manifesto promised that borrowing would be only 8 per cent of GNP and that our borrowing is nearer to 13 or 14 per cent?
Mr. O'Keeffe: The Deputy should deal in constant figures when making comparisons. The Deputy will see from the figures I gave at the end that far from  doubling, there was only a marginal increase in the level of borrowing in the period concerned.
Mr. O'Kennedy: Because of the level of activity in the economy, particularly in infrastructural development programmes there has been borrowing for public capital programme purposes. It is the Government's intention to maintain the appropriate balance in this area.
Mr. L'Estrange: Is it not true that in the manifesto and even last year in the budget the Minister stated that it was the intention to borrow only 8 per cent of GNP and is it not true that the Government have now borrowed 13 to 14 per cent? Is it not time to stop this rate's progress? Is it not true that the Government are also printing confetti money at present to get the country ready for a general election?
Mr. O'Kennedy: When I hear played back what I said I wonder are we listening to different records. The Deputy said that I said 8 per cent but what I said was 10½ per cent at the beginning of the year.
Mr. O'Kennedy: Yes, and also balance of payments which, as I said in my budget statement, is the major element in determining our borrowing requirement. Because our balance of payments, consequently, has significantly improved, we  are the only European country, apart from Britain, to have an appreciable improvement over last year.
Dr. FitzGerald: Would the Minister not agree that the present figure would be doubled but for the selling off of cattle stocks, including breeding stocks. and the 7 per cent drop in the volume of imports?
Dr. FitzGerald: Secondly, would the Minister not agree that in the budget speech he said that if the provision he had made in respect of the public service pay had to be increased, he was determined that we would not have a recurrence of last year's experience whereby such excess expenditure was added to borrowing? Has he not totally failed to carry out what he said in the budget speech?
Mr. O'Kennedy: Yes, and if I had the particular page I could refer the Deputies to it. I said that very deliberately then. The borrowing requirement was significant, not in itself but when seen against matters such as the balance of payments and the purposes for which the money was used. At that time our expectation was, in view of the downturn in the national economy, that his year's balance of payments would be of the order of 7 per cent.
Mr. O'Kennedy: It will be considerably better than that, which enabled the Government to cushion the effects of international recession by borrowing somewhat more for capital infrastructural development programmes.
Mr. L'Estrange: Would the Minister please inform this House and this country where the increased economic activity is, bearing in mind that we have 115,000 unemployed, 60,000 school children, 156,000 people on short time——
Mr. O'Kennedy: —— the number of new jobs created will be a record this year. Secondly, for the first time in very many years, immigration will certainly be not less than 20 million. That must be taken account of in unemployment figures.
Mr. O'Kennedy: Twenty thousand. Thirdly, the huge growth in the employment market due to the huge growth in population. Finally, our performance in this area against any objective criteria, again in other countries, is very remarkable, which is by complete comparison with the experience that this country had——
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