§ Mr. Cyril D. Townsendasked the Lord Privy Seal if he will make a statement about the settlement of debt issues outstanding between the Government of Zimbabwe and Her Majesty's Government and private United Kingdom bondholders.
§ Mr. LuceBefore the unilateral declaration of independence in November 1965, the Government of Southern Rhodesia had contracted certain obligations towards Her Majesty's Government, and in relation to United Kingdom holders of Southern Rhodesia bonds issued on the London market. Shortly after the620W election Mr. Mugabe stated that his Government intended to honour these obligations. Discussions were held in May and June, as a result of which agreed arrangements have been reached in relation to Her Majesty's Government's claims. In the light of the prospects for the Zimbabwean economy and their consequent capacity to service debt obligations, Her Majesty's Government agreed to write-off £22 million. This relates to Commonwealth development and welfare loans, Commonwealth assistance loans, and certain loans made by the International Bank for Reconstruction and Development, the repayment of which was guaranteed by Her Majesty's Government. We shall in due course be seeking the formal approval of the House for this action.
As to the remainder of the debt due to Her Majesty's Government, amounting to some £33 million, it was agreed that there should be a grace period of two years, that the payments should be re-scheduled over a period of eight years thereafter, and that the rate of interest payable on the outstanding amounts from the time of settlement should be 8 per cent.
Agreement has also been reached between the Council of Foreign Bondholders and the Government of Zimbabwe on the terms to be offered to the holders of Government of Southern Rhodesia stocks issued in London, which the council will recommend for acceptance. The arrangements will be announced by the council as soon as the technical details have been settled.
We are confident that the arrangements reached will help to reinforce the position of the Zimbabwean economy over the critical years ahead, and will serve to strengthen the capacity of the Zimbabwean Government to raise finance for development on international markets.