Hungarian Financial Agreement (Bonded Debt)

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 7th May 1959.

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Photo of Mr Luke Teeling Mr Luke Teeling , Brighton, Pavilion 12:00 am, 7th May 1959

asked the Chancellor of the Exchequer, in view of Her Majesty's Government's undertaking to bear in mind the default of the Hungarian Government on their external bonded debt to this country, why no steps were taken to include this matter in the trade agreement with Hungary in 1956, now shortly to be reviewed; and when it was last discussed by Her Majesty's Treasury with the Hungarian Legation in London.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

Two agreements were concluded with the Hungarian Government in 1956, namely, a three-year trade arrangement and a financial agreement covering United Kingdom financial claims against Hungary other than bonded debt. During the financial negotiations, the Hungarian Government offered, as part of a settlement covering all United Kingdom claims, to re-purchase over a period of years, for a small percentage of their nominal value, certain Hungarian bonds held in the United Kingdom. These proposals bore no relation to the contractual terms of the bonds and were unacceptable to the Council of Foreign Bondholders and the League Loans Committee. In the circumstances, the two Governments agreed that bonded debt should not be included in the financial settlement and that the bondholders' rights would in no way be affected by the conclusion of the financial agreement.

The Hungarian Legation has recently been reminded of the obligations of its Government in regard to bonded debt.

Photo of Mr Luke Teeling Mr Luke Teeling , Brighton, Pavilion

Am I to understand from my hon. Friend, therefore, that nothing has happened in the last three years from the Hungarian side? Since there is presumably no matter of principle involved as the Hungarians did make an offer, does he not think, if we are about to make another trade agreement to allow more imports from Hungary, it is high time that we tried to elicit another offer from the Hungarian Government?

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

Until the offer looks like being one which would be possibly acceptable to the Council of Foreign Bondholders, we do not think there is much point in pressing the matter if that would be to the detriment of an agreement on trade. At present, therefore, there is no intention of linking the trade discussions in any way with negotiations on bonded debt.