THE fall of the pound last year against European currencies such as the deutschmark added over £250 million to the national debt.
This emerged last night following criticism yesterday by the Fianna Fail leader, Mr Bertie Ahern, who said Mr Quinn owed an explanation as to how there had been a £1 billion increase in the national debt in 1995.
Exchequer borrowing last year was £627 million, according to the Exchequer returns published early this week. But the recent results from the National Treasury Management Agency showed that the national debt rose by £1 billion during 1995 to £30.2 billion, compared to £29.2 billion in 1994.
Additional borrowing by the Exchequer each year adds to the level of the national debt. However the fact that the national debt increased by much more than borrowing last year is understood to be explained by two factors. One is the decline in the value of the pound against currencies such as the dcutschmark.
This increased the Irish pound value of debt held in these currencies by over £250 million.
Whether this is a long term cost to the Exchequer will depend on currency trends in the years ahead as the debt falls due for repayment. A substantial amount of the foreign debt is in currencies such as the dcutschmark, at though in recent years borrowing in sterling and French francs has become more important.
The other factor increasing debt last year is that the NTMA gives investors a discount when they subscribe to purchase debt. In other words it costs the NTMA a little more than £100 to raise £100 for the Exchequer. This is believed to have added around £150 million to the debt last year.
Mr Ahern said yesterday "The only reason we are concerned about the level of the Exchequer Borrowing Requirement (EBR) is because it adds to the national debt."
Mr Ahern said as the long, debt has not increased significantly, exchange rate movements, seem an inadequate explanation for the discrepancy.
"I would like to know what financial manoeuvres are responsible for the increase in the national debt by approximately £1,000 million, nearly £400 million of which is unaccounted for in the 1995 EBR," he said.
Meanwhile, the Minister of State for Science, Commerce and Technology, Mr Pat Rabbitte, yesterday criticised what he called the vested interest lobbyists most media commentators and Opposition politicians "who are virtually at one in promoting the cuts in public expenditure chorus, irrespective of the impact on weaker sections of society".
Mr Rabbitte said the Finance Minister should ignore the "begrudgers and the avalanche of self servers".
