HC Deb 06 March 1957 vol 566 cc80-3W
Mr. Rippon

asked the Chancellor of the Exchequer whether he has any statement to make concerning a revision of the United States and Canadian Line of Credit Agreements of December, 1945, and March, 1946, respectively.

2. Mr. P. Thorneycroft

Yes. Agreement has now been reached with both Governments. The provisions of the 1945 and 1946 Agreements enabled Her Majesty's Government, if certain conditions were satisfied in any year, to obtain a waiver of interest on the loans. The interpretation of these Agreements has given rise to considerable difficulties. The new Agreements by which they are to be modified give Her Majesty's Government the option, if it finds that a deferment is necessary in view of the present and prospective conditions of international exchange and the level of its gold and foreign exchange reserves, to defer the payment of up to seven annuities until the end of the present schedule of payments. In addition the interest for 1956 forming the subject of the waiver claim will be deferred, on the same terms as those which govern the seven deferments, until all existing and deferred annuities have been paid. These new Agreements are subject to the approval of the United States Congress and the Canadian Parliament.

Her Majesty's Government have given an assurance that it is not its intention to avail itself of the major part of the potential deferments in the years immediately succeeding the date of the Agreements.

In the view of Her Majesty's Government these Agreements fulfil in a satisfactory manner the aim that appropriate modifications of the language of the existing Agreements should be made to carry out the spirit of their original intention.

Under the new arrangements Her Majesty's Government will pay all the annuities in full and with interest, even if it claims any deferments. No question can therefore arise of any default on our obligations. Furthermore, a potential source of misunderstanding between the Canadian and United States Governments and Her Majesty's Government is removed. While Her Majesty's Government have the right to defer any annuity within the limits stated, it is its responsibility to satisfy itself before doing so that such a deferment is necessary in the light of the conditions.

The texts of the Agreements are as follows:

U.S. Agreement

AGREEMENT TO AMEND THE FINANCIAL AGREEMENT OF DECEMBER 6, 1945 BETWEEN THE GOVERNMENTS OF THE UNITED STATES AND THE UNITED KINGDOM.

Subject to the provisions of paragraph 3 hereof, it is hereby agreed between the Government of the United States and the Government of the United Kingdom of Great Britain and Northern Ireland as follows with regard to the Financial Agreement executed by them on December 6, 1945:

1. Section 5 is amended to read:

Deferment of Annual Instalments

  1. (i) In any calendar year after December 31, 1956, in which the Government of the United Kingdom advises the Government of the United States that it finds that a deferment is necessary in view of the present and prospective conditions of international exchange and the level of its gold and foreign exchange reserves, the Government of the United Kingdom may defer the payment of the annual instalment for that year of principal repayment and interest specified under Section 4. Not more than seven (7) annual instalments may be so deferred. The first of any such deferred instalments shall be paid on December 31, 2001, and the others shall be paid annually thereafter, in order.
  2. (ii) In addition, the instalment of interest in respect of the year 1956 is hereby deferred, in lieu of any right of waiver hitherto existing. This instalment shall be paid on December 31 of the year following that in which the last of all other instalments, including instalments deferred under the preceding paragraph, is due.
  3. (iii) Deferred instalments shall bear interest at the rate of 2 per cent. per annum, payable annually on December 31 of each year following that in which deferment occurs.
  4. (iv) Payment of deferred instalments may be accelerated, in whole or in part, at the option of the Government of the United Kingdom.

2. Section 6 is amended to read:

Relation of this Line of Credit to other Obligations

The Government of the United Kingdom undertakes not to defer an instalment under Section 5 of this agreement in any year, unless it also defers the instalment due in that year under the Financial Agreement between the Government of Canada and the Government of the United Kingdom. dated March 6, 1946.

3. This agreement shall become effective when the Government of the United States has notified the Government of the United Kingdom that the agreement has been approved by the Congress and the Government of the United Kingdom has notified the Government of the United States that the appropriate Parliamentary action has been taken.

Signed in duplicate, this 6th day of March, 1957.

For the Government of the United States of America.

G. M. HUMPHREY,

Secretary of the Treasury of the United States of America.

For the Government of the United Kingdom of Great Britain and Northern Ireland:

HAROLD CACCIA,

Her Majesty's Ambassador Extraordinary and Plenipotentiary at Washington.

Canadian Agreement

FINANCIAL AGREEMENT TO AMEND THE FINANCIAL AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM AND THE GOVERNMENT OF CANADA, SIGNED AT OTTAWA, MARCH 6, 1946.

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Canada, desiring to amend the Financial Agreement signed at Ottawa, March 6, 1946, agree as follows:

Article

Article 4 of the said agreement and the heading thereto are revoked and the following substituted therefor:

"Deferment of annual instalments.

  1. (i) In any calendar year after December 31, 1956, in which the Government of the United Kingdom advises the Government of Canada that it finds that a deferment is necessary in view of the present and prospective conditions of international exchange and the level of its gold and foreign exchange reserves, the Government of the United Kingdom may defer the payment of the annual instalment for that year of principal and interest required to be made under Article 3 if the Government of the United Kingdom defers the payment required to be made in the same calendar year under the Financial Agreement between the Government of the United States of America and the Government of the United Kingdom signed at Washington, December 6, 1945. No more than seven such annual instalments may be so deferred. The first of any such deferred instalment shall be paid on December 31, 2001, and the others shall be paid annually thereafter, in order.
  2. (ii) In addition to the foregoing, the instalment of interest in respect of the year 1956, 83 is hereby deferred in lieu of any right of waiver hitherto existing. This instalment of interest shall be paid on December 31 of the year immediately following the year in which the last of all other instalments, including instalments deferred under the preceding paragraph, is due.
  3. (iii) Deferred instalments shall bear interest at the rate of 2 per cent. per annum payable annually on December 31 of each year following that in which deferment occurs.
  4. (iv) Payment of deferred instalments may be accelerated, in whole or in part, at the option of the Government of the UnitedKingdom."

Article

This agreement shall become effective at such time as shall be agreed upon by the two Governments.

In witness whereof the undersigned, being duly authorised thereto by their respective Governments, have signed this Agreement.

Signed in duplicate at Ottawa this 6th day of March, 1957.

For the Government of the United Kingdom:

J. J. SAVILLE GARNER.

For the Government of Canada:

W. E. HARRIS.