asked the Chancellor of the exchequer if he will take steps to reduce and eliminate the amount by which the United Kingdom's foreign currency obligations exceed its foreign currency reserves.

No. The two are not related in the way which the hon. Member implies.

Is not the right hon. Gentleman aware that, taking account of our obligations in terms of sterling balances, our foreign obligations exceed our so-called reserves by at least £4,000 million? Does he not agree that if any commercial organisation were to try to operate in that way, its directors would be put behind bars?

If a commercial organisation left assets out of the balance sheet, its directors would deserve to go to gaol. The hon. Gentleman takes no account of long-term assets. If we take the total value of external assets of £50·2 billion and deduct the total value of external liabilities of £44·3 billion in 1972, it will be seen that we have a healthy surplus of £5·9 billion.

Does my right hon. Friend agree that it makes exceedingly good sense to borrow now in the certain knowledge that we shall have large amounts of revenue coming in from the North Sea resources from 1978 onwards?

My hon. Friend makes a very sound point indeed.

Does not the Chief Secretary agree that we also need to take account of the fact that, in terms of sterling guarantees, the dollar rate in terms of the pound is running at a figure of 2·43 and that the pound in relation to the dollar is being floated at a rate of 2·34? Does he not agree that we are now in debt in relation to sterling guarantees to the tune of around £100 million? Should not this matter be taken into account along with our liabilities?

I am sure the hon. Gentleman knows the terms on which the guarantees to the overseas sterling area were renewed. It would be wrong to draw any conclusion at this point in time. The time for this to be judged is next March.

Does my right hon. Friend agree that a credit balance of about 10 per cent. on overseas commitments and liabilities is a narrow one, which may easily disappear if we continue to borrow overseas as we have been borrowing? Is he not afraid of a general relaxation of discipline in both central and local government following the habit of overseas borrowing? Is he not also afraid that a dangerous precedent will be created if the Government establish a new distinction between current and capital expenditure—a distinction which British Governments have never observed in the past?

No, Sir, I have none of those fears. I believe that the policy we are pursuing in borrowing overseas is entirely justified in present circumstances.