International Monetary Fund

Prayers – in the House of Commons at 12:00 am on 16th June 1988.

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Photo of Mr James Lester Mr James Lester , Broxtowe 12:00 am, 16th June 1988

To ask the Chancellor of the Exchequer if he will make a further statement on progress towards setting up the international monetary fund enhanced structural adjustment facility.

Photo of Mr Nigel Lawson Mr Nigel Lawson The Chancellor of the Exchequer

The enhanced structural adjustment facility of the IMF, designed to assist economic adjustment in the poorest countries, has now been set up and the first loans should be made shortly. The United Kingdom will contribute one sixth of the total funding of the interest subsidy on enhanced structural adjustment facility lending, which is the largest contribution of any country.

Photo of Mr James Lester Mr James Lester , Broxtowe

I warmly endorse my right hon. Friend's significant contribution to the development of policy, but can he say any more at this stage about his hopes of decisions from the Group of Seven meeting in Toronto?

Photo of Mr Nigel Lawson Mr Nigel Lawson The Chancellor of the Exchequer

I am grateful to my hon. Friend for what he said. Following the initiative, which I launched over a year ago in Washington on behalf of the United Kingdom to help the very poorest of the most heavily indebted countries to adjust their economies by giving some concession on their loans provided that economic policies were sound, there has in recent months and indeed, weeks, been an increasing degree of support for one variant or another of this approach. I am now hopeful that at the economic summit in Toronto, which I shall be attending early next week, we shall be able to reach an agreement on positive action.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee, Vice-Chair, Labour Party

Will that amount of help to the poorest under-developed countries amount to £1,000 million? I use that figure because the Chancellor knows that when he assisted the banks to write off their debts against those countries that were slightly better off, that amounted to £1,000 million in tax relief. If the top four clearing banks in Britain plus Standard Chartered can get £1,000 million in tax relief, why can the Chancellor not write off £1,000 million against the debt of the poorest countries in the world?

Photo of Mr Nigel Lawson Mr Nigel Lawson The Chancellor of the Exchequer

The hon. Gentleman continues to get the wrong end of the stick. If a bank incurs bad or doubtful debts as a result of lending to anyone, whether a sovereign country or an industrial company, its profits are reduced and therefore the taxes it must pay are reduced. If, on the other hand, those debts are paid back, the profits increase and the taxes are then paid. It is as simple as that.