Orders of the Day — International Monetary Arrangements Bill

Part of the debate – in the House of Commons at 5:35 pm on 11th July 1983.

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Photo of Mr Bowen Wells Mr Bowen Wells , Hertford and Stortford 5:35 pm, 11th July 1983

Jamaica was recently unable to fulfil IMF conditions and the IMF agreement was renegotiated, thereby enabling the economy to expand somewhat.

The Economic Secretary to the Treasury outlined the medicine that he said was standard IMF practice. I will read out a description of the usual IMF medicine As a condition for its assistance, the IMF almost invariably insists on measures that have the effect of contracting the economy, increasing unemployment and reducing consumption, in order to slow imports and shift resources to exports. The problem is that IMF conditions cannot work if applied at the same time in many countries, particularly in a period of global recession. That quotation is by Henry Kissinger writing in Newsweekat the beginning of the year, and not from any Keynesian Left-wing economist Dr. Kissinger approves the IMF as the only method open to apply the disciplines. However, he mentioned in his final sentence the great flaw. As my right hon. and learned Friend the Member for Hexham (Mr. Rippon) said, we cannot export to those who cannot buy. Therefore, a Marshall plan must be introduced, or a means by which those in need can buy. The IMF's mechanism and that of the World Bank is to lend money to state economies and to pay attention to the world trading system and the GATT. We must consider the totality of the international monetary system.

The Bill is a welcome step in the right direction. I congratulate my right hon. and learned Friend the Foreign Secretary on his negotiations when he was chairman of the IMF interim committee, especially as the Americans were much opposed to him at the time.

There is a note of hope. The problem of debt has brought together great minds and great speakers in the Chamber to consider the issues of international liquidity, international exchange rates and competing interest rates. If the experts can prepare themselves to deal with the situation on a more global basis, we shall lay the foundations for the expansion of world trade, which must be a precondition to domestic prosperity and the reduction of unemployment in this country. We live in a world in which electronics move vast quantities of money between exchanges. The poor are dependent on the rich and the rich are dependent on the poor. The world is inter-dependent, so there must be a proper rate of exchange and mechanisms for smoothing the problems of indebtedness and trade differences to assist the expansion of world trade. That will occur only if the Government have the political will to lead in the world. I beg that they do so.