International Monetary Fund (Substitution Account)

Oral Answers to Questions – in the House of Commons at 12:00 am on 24th July 1980.

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Photo of Mr Frank Hooley Mr Frank Hooley , Sheffield, Heeley 12:00 am, 24th July 1980

6. Mr. Hooley asked the Chancellor of the Exchequor when further talks will take place in the International Monetary Fund on the creation of a substitution account.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

Possibly at the next meeting of the interim committee to be held in Washington on 28 September.

Photo of Mr Frank Hooley Mr Frank Hooley , Sheffield, Heeley

Is the Chancellor aware that reform of the international monetary system was one of the main recommendations of the Brandt commission? What proposals are the Government to put forward for making more acceptable as a reserve unit the special drawing rights?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

I appreciate that that was one of the matters contained in the Brandt commission's report. It was discussed at the summit meeting at Venice. We shall be returning to the question of the substitution account and the wider issues at the meeting of the fund in September.

Photo of Mr Alastair Goodlad Mr Alastair Goodlad , Northwich

Does my right hon. and learned Friend accept that an alternative to the IMF substitution account in helping to recycle OPEC surpluses is the greater use of debt instruments, the repayment terms of which are related to the price of certain commodities so that the risk to the lender is related to commodities and not only currencies? Therefore, the risk to the borrowing country, which may be a less developed country with only one commodity as its product, is that much reduced.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

That is one of the methods that could be studied to deal with the problem that my hon. Friend has in mind. It is right to acknowledge the scale of the difficulties that arise for the less developed countries as a result of the large increase in oil prices last year and the consequent redistribution of funds throughout the world.

Photo of John Horam John Horam , Gateshead West

Has the right hon. and learned Gentleman seen the recent suggestions made about commodity bonds and oil bonds, which follow on from the question of the hon. Member for North-wich (Mr. Goodlad)? Will he ensure that these suggestions, which are valuable and imaginative, are pursued seriously at the appropriate international level?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

I shall ensure that the proposals are studied.