Orders of the Day — International Monetary Arrangements Bill

Part of the debate – in the House of Commons at 4:04 pm on 11th July 1983.

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Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney 4:04 pm, 11th July 1983

I am grateful to my hon. Friend for that point. I have long felt that the practices, rules and modus operandi of the IMF needed the most searching scrutiny and discussion in the House.

However, today we want to know whether the IMF looked at the Argentine military budget and the more than £2,000 million purchase of foreign arms. What was the attitude of the United Kingdom's representative on the executive board? The Economic Secretary did not answer those questions. When the Prime Minister was asked about them, she argued that the normal conditionality clauses of the IMF would exert pressure, to beneficial effect, on the Argentine Government's spending programmes. However, the last item of Government expenditure to be cut in a country that is run by a junta composed of army generals, navy admirals and air force marshals is the budget of the armed forces. Therefore, I am not impressed by that argument.

The third question that I put, and which I now seek to answer, was whether British withdrawal from further financial aid, if collective action could not be agreed, would lead to an Argentine default. That is difficult to believe. Although our contribution is substantial, 93 per cent. of the IMF loan and 90 per cent. of the commercial bank loan come from non-British sources. Therefore, the argument that if Britain had taken a stand it would have brought down the whole Argentine house of cards cannot be sustained. If that is the overriding fear, it takes all the strength from what the Economic Secretary had to say about the invigilation of the Argentine economy, the quarterly examination of its performance and the strength of performance targets, because those performance targets would never be insisted on if the danger of default was always judged to be greater than the difficulties resulting from insisting on their adequate performance.