Brazil (Hansard, 18 February 1987)

1. Mr. Jim Callaghan
asked the Secretary of State for Foreign and Commonwealth Affairs if he will seek to pay a visit to Brazil.

§ The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Eggar)
My right hon. and learned Friend has no plans at present to pay a further visit to Brazil. However, my right hon. and noble Friend the Minister of State, Foreign and Commonwealth Office will visit Brazil from 19 March to 23 March.

Mr. Callaghan
I thank the Minister for his reply. Is he aware that Brazil has the largest foreign debt in the world—£104 billion—and an internal inflation rate of 450 per cent.? Is he further aware that if Brazil defaults on its payments it will create havoc in the world's banking and trading system? Given that our Chancellor is the hardest of all hawks in relation to Third world countries, what advice or assistance can the Minister give to help Brazil to stabilise its financial and trading affairs with the rest of the world and with this country in particular?

§ Mr. Eggar
We are, or course, aware of the debt problem that Brazil faces, but we welcome the strenuous efforts that have been made by the Brazilians to meet their repayment obligations. We are entirely convinced that an IMF agreement offers the best route to long-term economic recovery. We are, of course, confident of Brazil's long-term economic potential.

§ Mr. Maxwell-Hyslop
On this crucial matter, will my hon. Friend bear in mind that it is pointless to ask Brazil to pay a rate of interest higher than 6 per cent. on its debt, because a higher rate would be wholly incompatible with the minimum growth rate required to provide a degree of economic opportunity for its population, without which democracy cannot be sustained?

§ Mr. Eggar
I recognise my hon. Friend's great knowledge of the problems that Brazil faces. I am not sure that I go all the way with him in his assumptions about the maximum interest rate, but we have, of course, welcomed the accord on official debt that was reached at the Paris Club meeting of Brazil's creditors in January.

§ Mr. Foulkes
Does the Minister agree that Brazil represents a great opportunity for British trade and 894 investment, particularly in view of recent reports that the Arabs are about to pull out? Will he confirm that he has received representations regarding the lack of Export Credits Guarantee Department cover? Have he and his colleagues been able to persuade their colleagues in other Depertments to consider restoring this important element in our trade with Brazil?

§ Mr. Eggar
I welcome the importance that the hon. Gentleman attaches to inreasing our trade with Brazil. As I am sure he is aware, Brazil is already our largest market in Latin America, but we need to increase our market share even further. As a result partly of the Paris Club meeting in January and the agreement to which I have referred, we are giving close attention to how that agreement affects our policy on export credits.