§ 4. Mr. Skinnerasked the Chancellor of the Exchequer, further to the reply of the Prime Minister on 20 December, Official Report, c. 352, what progress has been made with the loans by the International Monetary Fund and British banks to Argentina.
§ The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne)An IMF executive board meeting on 24 January approved Argentina's application for a SDR 1.5 billion stand-by facility in support of an economic stabilisation programme. A drawing of SDR 0.5 billion under the compensatory financing facility was also approved. A short-term bridging facility for $1.1 billion provided by a group of international banks was signed at the end of last year. British banks are participating in this and are taking part in negotiations which are currently in progress for a $1.5 billion medium-term loan.
§ Mr. SkinnerIs the Minister aware that the Tory Government and the guarantees of the Prime Minister in answer to a question on 20 December have sent a lifeboat to Argentine banks? How do the Government and the Prime Minister reconcile that with the Fortress Falklands policy? Are they not propping up a Fascist regime? The 1041 Government talk about brave boys dying on the beaches, yet they are propping up the Argentine banks with British taxpayers money? What hyprocisy that is.
§ Mr. Bruce-GardyneI hope that the hon. Gentleman feels better for having got that off his chest. May I try to explain to him—
§ Mr. SkinnerI know exactly what is happening.
§ Mr. SpeakerOrder the hon. Member for Bolsover (Mr. Skinner) asked his question and he must allow the answer to be given.
§ Mr. SkinnerThe question was not answered.
§ Mr. SpeakerOrder. The hon. Gentleman must control himself.
§ Mr. Bruce-GardyneThe loans to which my original answer referred have an important contribution to make towards helping Argentina's economic adjustment and thereby safeguarding the health of the international financial system. The purpose is to ensure that Argentina continues to service its existing debts. If it did not, that would create problems for the entire international banking community and have repercussions for British trade.
If the hon. Gentleman does not understand that—
§ Mr. SkinnerI understand.
§ Mr. Bruce-Gardyne—he had better do his homework and learn something about it.
§ Mr. John TownendI accept what my hon. Friend said, but is he not aware that there is widespread concern that we are backing loans to Argentina while that country is still spending considerable amounts on rearming? If it was not doing so, it could service its debts.
§ Mr. Bruce-GardyneAs the Prime Minister has made clear, the loans are not for arms purchases but to help Argentina to continue to pay its debts. Tight IMF ceilings on both external credit and on credit to the public sector should inhibit the diversion of funds to military expenditure.
§ Mr. SkinnerIt stinks.
§ Mr. Robert SheldonIs the hon. Gentleman aware that there is some dispute over the size of the foreign debt incurred by Argentina, with its central bank disagreeing with its Economic Ministry to the extent of $4 billion? In view of the large packages which the hon. Gentleman mentioned, and which have been supplemented by the news that we had at lunch-time today, should not this serious difference be resolved before these large packages are finally implemented?
§ Mr. Bruce-GardyneI noted the reports in the press to which the right hon. Gentleman referred, but that is a matter for the Argentine authorities to sort out among themselves. We cannot arbitrate between their different estimates, but whatever the exact figure—
§ Mr. Bruce-Gardyne—it is clear that Argentina would have been faced with serious debt service difficulties without the arrangements agreed with the IMF, the commercial banks and other creditors. That could not have been in the interests of the international community.
§ Mr. JayAs the Prime Minister told us last night that we must not talk to the Argentines until the formal ending of hostilities, is it right that we should lend them such large sums of money?
§ Mr. Bruce-GardyneI am surprised that the right hon. Gentleman, with his experience of these matters, should imagine that it would be in the interests of the international trading community that arrangements should not have been arrived at to enable the Argentine Government to continue to service its national debt.
§ Sir John Biggs-DavisonOn a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.