§ Mr. Morganasked the Chancellor of the Exchequer whether he will state his intentions for the future servicing of the Ottoman Guaranteed Loan, 1855.
§ Mr. Selwyn LloydArrangements for servicing and ultimately redeeming the loan were announced by the then Chancellor of the Exchequer, my right hon. Friend the Member for Woodford (Sir W. Churchill), in his statement on the Anglo-Egyptian Financial Agreement on 21st March, 1929 (HANSARD, 21st March, 1929, Cols. 1863–4). My right hon. Friend explained that the surpluses of the so-called Cyprus Tribute, over and above what had been necessary for the interest payments on the loan, had been accumulated for sinking fund purposes and announced that the bonds which had been purchased with these accumulated surpluses were to be cancelled forthwith. The Egyptian payment, in final settlement of their liability for the loan and subsequent surpluses of the Cyprus payments were either to be applied to the purchase of the bonds in the market for cancellation or to be accumulated until the whole of the outstanding loan could be redeemed, after notice, at par.
Thus, since the Cyprus payments were matched by an equivalent grant-in-aid, interest was in effect paid and a sinking fund built up from Colonial Office Votes. These arrangements continued until the granting of independence to Cyprus in 1960. The interest payment on 1st February, 1961 was made from the Consolidated Fund under the terms of the original guarantee but, in the absence of statutory authority, no contribution was made to the sinking fund. Notwithstanding the changed status of Cyprus, it is, however, the intention of Her Majesty's Government to service the loan at the rate envisaged in my right hon. Friend's statement of 1929 and thus fulfil the undertaking given on that 72W occasion. We accordingly propose that six months' notice to redeem the loan should be given on the first interest date when the sinking fund would have been full if the annual payments of £92,800 from Colonial Office Votes via Cyprus had continued. The exact date of the notice will depend on the future price of the investments held in the sinking fund, but on the basis of present prices it could be expected to be 1st August, 1962.
Until final redemption interest payments will continue to be made from the Consolidated Fund under the guarantee. A once-for-all payment will be made from the Consolidated Fund at the time of redemption to meet the deficiency in the sinking fund. Provision for authorising the latter will be included in this year's Finance Bill and the necessary Special Procedure and Financial Resolutions will be tabled today.