§ Mr. Lathamasked the Secretary of State for Foreign and Commonwealth Affairs to what factors he attributes the decline in net private aid flows to the Third world between 1980 and 1984, and in particular the fall in bank lending.
§ Mr. RaisonThe decline in net private flows to developing countries is the product of general world 551W economic circumstances. During the 1970s many such countries borrowed heavily on floating rate terms in currencies which in recent years have yielded high real rates of interest. This has led to an increasing level of debt servicing and a corresponding decline in creditworthiness. The increased risk of international bank lending has resulted in banks, including those in the United Kingdom, reducing the level of net lending to developing countries.
Net private flows from the United Kingdom to developing countries are estimated to have declined from £4.5 billion in 1980 to £1.4 billion in 1984, the main element being a decline from £1.9 billion to £0.1 billion in bank lending on market terms (that is loans with a maturity of one year or more, net of repayments). Total international bank lending from all sources to developing countries declined markedly over the same period.