§ Mr. Campbell-Savoursasked the Prime Minister if Her Majesty's Government will seek to have restrictions placed on International Monetary Fund loans to Argentina such that money advanced may not be used for the purchase of arms.
§ The Prime MinisterThe rules of the IMF do not allow such restrictions to be placed on its loans. The conditions which the fund may attach to its lending are set out in decisions adopted in 1979 (Selective Decisions of the International Monetary Fund, pages 20–22), a copy of which is in the Library of the House. They are normally confined to setting limits on broad economic indicators, such as public sector borrowing, external borrowing, and the lifting of debt arrears.
9WIn supporting the IMF loans we took into account the very tight limits imposed by the fund on both public sector and external borrowing and the requirement that debt arrears should be paid for by June 1983. These limits should help to constrain Argentina's ability to purchase arms, however financed. We also took account of the damage that an Argentine default would do to the financial stability of third countries to whom it owes money, of the effect it might have on other countries in similar difficulties, and of the damage to the prospects for economic growth and employment worldwide.