Savings on Dollar-Denominated Debt
Quinn asked how much the State saved on interest for dollar-denominated loans. MacSharry said the 1987 exchange-rate fall reduced those payments by about £10 million; each further one-percentage-point fall was estimated to save somewhat less than £2 million annually.
asked the Minister for Finance if he will quantify in terms of Irish punts the savings which have accrued to the State with regard to the repayment of interest on dollar delineated loans; and if he will make a statement on the matter.
Comment on this
I take it that the Deputy has in mind the effect on interest payments of the fall in the value of the dollar.
The cost in Irish pound terms of paying interest on the Exchequer's dollar denominated debt during 1987 was about £10 million less than it would have been if the end-1986 Irish pound-dollar exchange rate had applied over the whole of 1987.
It is estimated that the full year effect on Exchequer interest payments of each one percentage point fall in the value of the dollar is somewhat less than £2 million. Since the US dollar represented less than one quarter of the Exchequer's foreign debt, changes in other exchange rates have also to be taken into account. In 1987 the overall impact of exchange rate changes on the cost of servicing the Exchequer's foreign debt was a reduction of about £8 million.