§ Mr. Andrew Smithasked the Chancellor of the Exchequer what plans he has to grant tax relief to the banks in respect of their write-down of Third-world debt; and what will be the cost to the Exchequer.
§ Mr. LilleyTax relief due to banks in respect of loans which cannot be recovered in full is governed by the ordinary tax rules which apply to any trader who gives credit in the course of his business. Insufficient data are available to estimate the notional amount of tax revenues forgone as a result of losses incurred by banks on irrecoverable loans.
§ Mr. Andrew Smithasked the Chancellor of the Exchequer how much of the lending to the Third world by British banks was to finance the servicing of existing loans, in each of the last five years.
§ Mr. LilleyNo comprehensive data are available for annual flows of gross lending by British banks to less740W developed sovereign borrowers which identify the purpose to which such lending has been put. However, end-year consolidated figures for United Kingdom registered banks' total claims on less developed countries for the period 1982–86 are as follows. British-owned banks account for around three quarters of the total. Firm figures for interest paid to British-owned banks are unavailable, but a rough calculation suggests that the annual amounts paid by less developed countries might have fallen by about a third between 1982 and 1986, the effect of an increase in the debt outstanding being more than offset by a decline in interest rates.
End-period Total ․ billion 1982 45.9 1983 47.8 1984 47.4 1985 48.0 1986 49.2 Notes:
(1) Changes between years reflect the effect of exchange rate movements as well as flows of lending.
(2) Many developing countries, included in these figures, have not experienced problems in servicing their debts.