Asked by: Liam Byrne (Labour - Birmingham, Hodge Hill)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of selling existing foreign currency reserves for the Government's public sector net debt; and if he will make a statement.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
There has been no assessment made of the effects of selling existing foreign currency reserves.
The reserves have a clearly defined function as set out in the Exchange Equalisation Account (EEA) Act 1979. The foreign exchange reserves are held on a precautionary basis in the event of any unexpected shocks and are also used to provide foreign currency services for government departments, and to carry out the UK’s obligations under its membership of the IMF.
The Chancellor set out new fiscal rules at Budget, and the OBR has confirmed we are on track to see debt falling by 2024-25, and to meet all our fiscal rules.
Asked by: Liam Byrne (Labour - Birmingham, Hodge Hill)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent assessment he has made of the effect on the public sector net debt of selling existing foreign currency reserves.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
There has been no assessment made of the effects of selling existing foreign currency reserves.
The reserves have a clearly defined function as set out in the Exchange Equalisation Account (EEA) Act 1979. The foreign exchange reserves are held on a precautionary basis in the event of any unexpected shocks and are also used to provide foreign currency services for government departments, and to carry out the UK’s obligations under its membership of the IMF.
The Chancellor set out new fiscal rules at Budget, and the OBR has confirmed we are on track to see debt falling by 2024-25, and to meet all our fiscal rules.
Asked by: Liam Byrne (Labour - Birmingham, Hodge Hill)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the average rate of return on the Government's holdings of (a) special drawing rights and (b) foreign exchange holdings in each of the last 10 years.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
Information is not held in the form requested and could only be produced at a disproportionate cost due to the complexities of the analysis required.
The Exchange Equalisation Account (EEA) Annual Report and Accounts contains information on the financial position of the Government’s foreign exchange holdings, including the income and asset position. Details of the interest rate on special drawing rights is published by the IMF on a weekly basis. Rates of return may therefore be estimated with reference to this published information.
https://www.gov.uk/government/collections/hmt-central-funds#exchange-equalisation-account
https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14/51/Special-Drawing-Right-SDR
Asked by: Liam Byrne (Labour - Birmingham, Hodge Hill)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the average annual interest was on the UK’s foreign reserves in each of the last 10 years.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
Information is not held in the form requested and could only be produced at a disproportionate cost due to the complexities of the analysis required.
The Exchange Equalisation Account (EEA) Annual Report and Accounts contains information on the financial position of the Government’s foreign exchange holdings, including the income and asset position. Details of the interest rate on special drawing rights is published by the IMF on a weekly basis. Rates of return may therefore be estimated with reference to this published information.
https://www.gov.uk/government/collections/hmt-central-funds#exchange-equalisation-account
https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14/51/Special-Drawing-Right-SDR
Asked by: Liam Byrne (Labour - Birmingham, Hodge Hill)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what his policy is on the reallocation of the IMF's existing stock of Special Drawing Rights.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The IMF Special Drawing Right (SDR) is an international reserve asset designed to supplement the official reserves of IMF member countries. SDRs are allocated to members, including the UK, in proportion to their IMF quota shares. HMG therefore holds SDRs as part of the UK’s international reserves.
The UK has previously used its SDRs to lend to the IMF’s concessional financing facility, the Poverty Reduction and Growth Trust (PRGT). The UK also strongly supports work on a new SDR allocation to provide additional financing to low-income countries. As this year’s G7 Chair, the UK will continue to work closely with the IMF and international partners on options for the further voluntary channelling of SDRs.