HC Deb 13 April 1965 vol 710 cc1151-3
28. Mr. J. H. Osborn

asked the Minister of Overseas Development if she will publish in the OFFICIAL REPORT, the total values of grants and loans made to under-developed and developed countries respectively, for the years 1959 to 1964; what was the total value of outstanding loans to the under-developed countries and the more developed countries on 31st December, 1964; what has been the total amount of interest remitted to this country and the rate of interest on outstanding loans in each of the last six years; if she is satisfied with the current position; and what proposals she has for changes.

Mrs. Castle

The hon. Member will understand that my Departmental responsibility is limited to economic aid to developing countries. I am circulating in the OFFICIAL REPORT details of aid grants and loans since 1959, and the amounts of these loans outstanding on 31st December, 1964. Some loans to developing countries are interest-free; others are based on the rate at which the Exchequer itself has borrowed for comparable periods, but not infrequently with interest waivers and grace periods as well as capital repayment for the initial years of the loan. The rates of interest have varied, therefore, between nil and 7 per cent.

It must be borne in mind that nearly one-half of our economic aid is in grants, and that the waivers of interest, made in a number of cases since 1963, reduce the effective rate over the whole loan substantially. The terms of our loans to developing countries are under review.

Mr. Osborn

I thank the right hon. Lady for that detailed reply, but may I ask if she is aware that the First Secretary of State has written to private industry asking it to look at the return on its investment overseas? How does she expect this to affect her judgment on rates of interest on loans and grants overseas?

Mrs. Castle

The terms of Government aid are a quite separate issue from that of private investment.

Mr. Tilney

Is the right hon. Lady aware that the Budget of her right hon. Friend militates against private enterprise investment in many developing countries?

Mrs. Castle

I cannot accept that assumption. It has not been established on the lines that the hon. Member has suggested, and my right hon. Friend has told the House that he will watch this matter.

Mr. Chapman

Can my right hon. Friend say when she expects to make an announcement about rates of interest on Government loans to developing countries? Is she aware that we have been very patient in this matter, fully understanding her difficulties, but that it is now time that Her Majesty's Government's policy in this matter was stated in a clear form?

Mrs. Castle

I shall certainly make the announcement at the earliest possible moment.

Mr. R. Carr

How can the right hon. Lady say that the Budget will not have an effect on aid by private investment when it is the avowed intention of her right hon. Friend to reduce capital outflow by £100 million a year?

Mrs. Castle

Because one of the byproducts of this tax might be that firms overseas will plough back more of their profits in the developing countries themselves.

Following is the information:

ECONOMIC AID TO DEVELOPING COUNTRIES* (£000)
1959 1960 1961 1962 1963 1964
Bilateral Grants … … 55,000 57,549 73,063 74,090 69,286 81,997
Bilateral Loans … … 54,000 66,645 82,239 69,055 69,693 92,484
Multilateral Grants … … — 6,200 5,900 6,628 11,945 9,426
Drawings on I.B.R.D. and I.D.A. subscriptions … … 21,000 19,100 600 600 6,986 6,597
*No financial aid was extended to developed countries during these years.