HC Deb 06 December 1989 vol 163 c238W
Mr. Mans

To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the future of the aid and trade provision soft loan facility.

Mrs. Chalker

In 1986, a soft loan facility within the aid and trade provision of the overseas aid programme was established for an initial period of five years, ending March 1991. It has enabled ATP grant funds to support long-term loans to developing countries, at concessional rates of interest, provided by private banks and guaranteed by ECGD, for agreed sound development projects. This complemented the existing mixed credit instrument by which ATP grants are provided normally in association with export credits to help finance the capital costs of sound development projects.

A review of the soft loan facility has now been completed. It has been agreed that the facility should be extended beyond March 1991. The method of ATP support will, however, be changed so that ATP funds used to reduce the rate of interest to the borrower, will be provided over the construction period of the project and during the drawdown period of the loan, rather than as at present over the full life of the loan.

The proposed new method of funding will enable us to dispense with the need for separate allocations of ATP funds for mixed credits and soft loans. This will enable us to respond more flexibly to individual circumstances using whichever financing mechanism is the more cost effective. The level of the overall ATP allocation within the aid programme is a matter for Ministers to review annually, but no significant future changes are seen at present from current levels of ATP project support.

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