§ 1. Mr. Skinnerasked the Chancellor of the Exchequer what recent meetings he has had with other Finance Ministers regarding countries rescheduling of debt; and if he will make a statement.
§ The Chancellor of the Exchequer (Mr. Nigel Lawson)I attended the meeting of the IMF interim committee on April 12, where international debt problems were among the matters discussed. It is likely that this is one of the subjects we shall be discussing at the London economic summit next month.
§ Mr. SkinnerWill the Chancellor of the Exchequer confirm that, in view of the recent rise in interest rates, especially in the United States, and mirrored over here, the rescheduling debt of those countries could be increased by as much as $3.5 billion for every 1 per cent. rise? Will he also confirm that at the economic summit there is likely to be discussion of a proposal for two-tier interest rates, so that the bankers can save their own skins? If the bankers and Governments together are prepared to distort market forces to look after themselves, why can we not have lower interest rates on a two-tier basis for worthy causes at home, to reduce the dole queue?
§ Mr. LawsonThe hon. Gentleman is not altogether accurate when he says that the rise in American interest rates has been mirrored over here. There has been a rise in this country, but it has been very much less. Since 14 March, when the base rate went down to 8 1/2 per cent. in this country, United States interest rates have risen by 1 1/2 per cent.; here they have risen by between 1/2 and 3/4 per cent. Our interest rates are well below American interest rates for the first time ever. Nevertheless, it is an unwelcome increase, small as it is.
As for the two-tier system, I have read rumours in the newspapers about it, but I know of no such proposals being made at the London summit or elsewhere. Finally, and here the hon. Gentleman is absolutely right, the high level of American interest rates is a very real problem for the debtor countries.
§ Mr. DickensDoes my right hon. Friend accept, with regard to the Argentine debts, that the Americans may have been seeking to preserve the future of the international banking system and perhaps also to reflect on the emergent democracy in Buenos Aires, or does he think that these debts ought to be marked by the commercial banks as non-performing in default?
§ Mr. LawsonI think that what the Americans had in mind, among other things, was to try to coax the Argentines into an agreement with the International Monetary Fund. It is most important that there should be an agreement and I am afraid there is no sign of one at present. The British Government are clear that Argentina will have to abide by the rules which other debtor countries have had to abide by if it wishes to receive assistance from the Western countries.