§ Mr. Walker
asked the Secretary of State for Foreign Affairs what loans Her Majesty's Government are proposing to make to Afghanistan; and what will be their terms.
§ Mr. Mathew
Her Majesty's Government have offered the Afghan Government two loans under Section 3 of the Export Guarantees Act, 1949. The first of these loans is for £220,000, to meet the costs of the renovation of the Baghlan Sugar Factory in Northern Afghanistan. The second loan is for approximately £600,000, for the construction of a cotton seed oil extraction factory in the Helmand Valley in South-Western Afghanistan. Both loans will be repayable over a period of fifteen years, including a grace period of five years in which no repayments of principal will be required.
In view of Afghanistan's acute development needs and the heavy burden of debt she has already incurred, we have now agreed that there should, in addition, be a waiver of the interest due during the first five years of the life of each of these loans.
The cost of the waiver of interest will be borne on the Foreign Office Grants and Loans Vote. Payments will be made from that Vote to the Acquisition of Guaranteed Securities Fund, which is administered by the Export Credits Guarantee Department, in order to recompense the Fund for the interest waived. Parliament will be asked in due course to approve a Supplementary Estimate, if this is necessary, in respect of the current financial year. Meanwhile, if necessary, an advance will be obtained from the Civil Contingencies Fund.