Argument for the Devaluation of the Irish Pound, Irish Independent, October 1992.
Argues against high interest rates supporting a high value of the Irish Pound, since both are injurious to Irish industry and farming, and suggests a devaluation of 10%.
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26 March, 1992
I write to you concerning the unfairness of Telecom Eireann's tariff structure, with regard to rural Ireland and to the West of Ireland in particular.
At the very least, all areas of rural Ireland should have their major shopping and administrative centres within their local charge area. This would not only benefit the local economy, but would also benefit Telecom itself, as it would encourage greater use of the phone. It would encourage people not already on the phone to get one, and the more people on the phone the better for the telephone service. A good and cheap telephone service is almost essential for a modern market economy. In this respect rural Ireland is at a decided disadvantage, when compared to Dublin and other large metropolitan areas. In fact, the sparser and more isolated the population, the more important a good and cheap telephone service is. Applying Telecom's own slogan "let your fingers doe the walking", it is clear one would have to do al lot more walking in the sparsely populated West of Ireland than in Dublin city. If one wanted to be really fair to the rest of the country and "treat all the children of the nation equally", major government and commercial offices, hospitals and the like, in Dublin, would want to be made local to the rest of the country. Maybe the 1800 Freephone Service, or some variant of it, where one would only be charged at the local call rate, could be used in this connection. Come on Mr Reynolds, open up government to the People. This might be more meaningful and effective than opening up government offices to the people on a Saturday morning.
The provision of a freer and more available telephone service, to the rest of the country, is likely to be opposed by the east coast establishment, as they have opposed, and continue to oppose, many worthwhile projects in the West of Ireland, for example Horan International Airport in Co Mayo. It is time for the people of rural Ireland to stand up and demand the level of service they are entitled to, and removal of all unnecessary restrictions. It is only then that Ireland will really develop and take its rightful place among the nations of Europe, and the World.
Current Comment
Rural Ireland still does not have local call access to most government offices. The Dublin O1 area has, however, been given local numbers to call certain central government offices that have been relocated to other parts of the country. This clearly shows up the inequity of the system and compounds it. One way of completely overcoming the inequity would be a single standard charge rate, applied by Telecom Eireann and other telephone service providers, for all calls made within the country and to Northern Ireland. This was alluded to by Alfie Kane, CEO Telecom Eireann, recently, according to newspaper reports. Such a charge would probably be at, or slightly above, existing local rates. (10/10/98)
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6 October, 1992
Published in the Irish Independent, October 1992.
The Irish Pound has increased in value, by about seven percent, against our main trading partners, over the last three months. Against the British Pound there has been a gain of about 20%. Our short term interest rates have doubled, in an effort to keep our pound at a level which is injurious to Irish trade and industry, including farming, and the high interest rates themselves are also injurious to the economy, as well as being a hardship to those with borrowings and mortgages.
Some maintain that Sterling is at present undervalued and will increase in value in the medium term. This is not necessarily the caste. With the British economy still in recession and interest rates still relatively high, compared to German rates and to the British rate of inflation, at the first sigh of a strengthening of sterling the British are likely to further cut interest rates to stimulate the economy. They will also endeavour to control prices and wages, to maintain the competitive advantage of the devaluation.
A devaluation of 10% in the Irish pound would bring us close to parity with Sterling, at present rates. The most Sterling is likely to come back in the medium term is about 5%, which would put the devalued Irish pound at about 95 British pence.
We are at a competitive disadvantage against the devaluing countries, Britain, Spain and Italy, not only in their own markets but also in our domestic market and in other markets. We may not lose out on existing contracts, in non-devaluing countries, but when it comes to negotiating new contracts we will be in a difficult, if not impossible, position. We are already in trouble in the French market, with respect to lamb prices.
The implementation of selective aid packages, by the government, to companies in difficulty is unlikely to extend to all those needing it, and the likelihood of decisions being influenced by political favouritism in not to be discounted. I do not believe a devaluation, in present circumstances, will lessen confidence by foreign investors in the Irish economy. Indeed, if we do not devalue now and are forced to devalue at a later stage, or, in the absence of a devaluation, our economy is driven into recession and higher levels of unemployment, it will be much less attractive to foreign investment.
Current Comment
The Irish Pound was devalued by 10% at the end of January 1993, after a lot of money had been spent in a fruitless defence on the currency. At that stage with the economy weakened and confidence severely shaken a devaluation of 15% was called for, as I pointed out in a further letter of January 25, 1993. Even though interest rates fell after the devaluation, they still remained relatively high as did the value of the Irish Pound, which remained at the top of the EMS band of currencies and exceeded parity with Sterling for a period. This delayed the recovery of the Irish economy. (11/10/98)
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