§ Mr. Knoxasked the Chancellor of the Exchequer if he will review the operation of the exchange cover scheme for public sector borrowing in foreign currency.
§ Mr. NottMy right hon. Friend has decided to modify the method of calculating the interest benefit which accrues to borrowers under this arrangement. This modification is designed to provide a more demonstrable and explicit inducement to borrowers to secure the finest possible terms, and, following recent changes in interest rates, to maintain the flow of this borrowing.
From today, eligible borrowers who contract to borrow in United States dollars under this scheme will be permitted to retain a proportion of the difference between the applicable Government lending rate and the cost of the dollar loan rather than a maximum of ½ per cent. as at present. The proportion will be adjusted from time to time as interest rates change with the broad object of maintaining, in present circumstances, an interest benefit of about 1 per cent.
Broadly similar arrangements will apply to approved borrowing in other currencies as appropriate.