§ Mr. Lawson
At the annual meeting of Commonwealth Finance Ministers in September, I announced that the United Kingdom would make a contribution to the interest subsidy associated with the proposed enhanced structural adjustment facility (ESAF) of the International Monetary Fund, which is designed to support structural adjustment programmes in low-income countries. Since then I have reviewed the United Kingdom's contribution to the enlarged SAF, decisions on which should be completed by the end of this month. The United Kingdom executive director to the IMF has now been authorised to increase Her Majesty's Government's earlier offer to an interest subisidy sufficient, at present interest and exchange rates, to subsidise lending rising to I billion SDRs (the equivalent of £750 million). This is more than double our earlier offer.
The facility will complement the United Kingdom's own initiative for measures to relieve the burdens of bilateral debt servicing of these countries, which I announced last spring in Washington and which we are continuing to press. There is increasing international recognition of the need to relieve the debt burdens of the poorest African countries, provided they are pursuing sustained programmes of economic reform.
Additional funds will be made available to the overseas aid programme to cover the costs of this increased contribution. The additional costs in 1988–89 will be charged to the reserve and will therefore not add to the total of planned public expenditure.
The prospect of this additional contribution has been warmly welcomed by the IMF managing director and is being made on the basis that appropriate contributions will be made by other major countries and that differentially favourable access will be given to those in greatest need, especially the low-income heavily-indebted countries of sub-Saharan Africa.