§ Mr. Tilneyasked the Secretary of State for the Colonies whether he is aware of the serious financial situation in Zanzibar; and what action he proposes to take.
§ Mr. Maudling:The opportunity was taken at the time of the recent Constitutional Conference to discuss the position with Zanzibar Ministers. Zanzibar's revenues are heavily dependent on cloves exports and if, as appears likely, import restrictions in the main markets severely curtail the level of exports, Zanzibar will end their current financial year on 30th June, 1962, with a budgetary deficit of about £630,000, which exceeds the reserves available. Zanzibar will also face difficulty in balancing the budget in 1962–63. In these circumstances Her Majesty's Government have agreed to make immediate repayment of the outstanding loan of £200,000 provided at the time of the 1895 Agreement between Great Britain and Zanzibar. This sum will be advanced from the Civil Contingencies Fund pending the presentation of a supplementary estimate to Parliament.
Her Majesty's Government have also undertaken to assist the Zanzibar Government if necessary with grant-in-aid of the expenses of administration in the period up to 30th June, 1963, When the position will be reviewed. Over that period the finances of Zanzibar will be subject to financial control by Her Majesty's Government. The Zanzibar Government recognise the need to bring the budget into balance at the earliest possible date and accept that this will entail economies in expenditure and measures to increase revenue.