§ Mr. Marland
asked the Secretary of State for Trade if he will make a statement on the outcome of the discussions held with the Polish authorities on the Polish payments problem.
§ Mr. Biffen
The United Kingdom has taken part in a series of talks between the Polish Government and the Governments of its main overseas creditors. An agreement126W was reached in Paris on 27 April dealing with debts maturing in the remainder of 1981. Within the international framework a bilateral agreement between Her Majesty's Government and the Polish Government was signed in Warsaw on 2 July. This provides for a restructuring of the principal and interest of 90 per cent. of debts guaranteed by ECGD and falling due for payment between 1 May and 31 December 1981. After adjustment to take account of interim assistance given earlier in the year, the sum to be restructured will be about £75 million. These debts will now be repaid over four years commencing 1 January 1986. The restructured debts will carry interest at a floating rate of 1 per cent. above the appropriate market rate. The Paris agreement provides for possible extension of these arrangements by stages through 1982 and 1983 by agreement between Poland and its creditors, depending on the progress of the Polish Government's economic stabilisation plan.
In addition, I have instructed ECGD to maintain for the time being a modest level of general short term export credit guarantee facilities, and to provide guarantees for specific new credits totalling £45 million for the remainder of 1981, in addition to the credits of £20 million which I announced on 9 April 1981. Much of this credit has been used for purchases of food and animal feed and the United Kingdom has participated in a scheme operated by the European Community for subsidising the price of these commodities. Part of it has also been made available for industrial goods.
The Government have also been kept informed of the progress of talks between United Kingdom banks and the Polish authorities about the restructuring of unguaranteed bank debt.
The Government hope that these arrangements will help the Polish authorities to resolve their present serious payments problems and return to normal trading relations as quickly as possible.