§ Sir Fergus MontgomeryTo ask the President of the Board of Trade when he proposes to publish the Monopolies and Mergers Commission report on the Commonwealth Development Corporation; and if he will make a statement.
§ Mr. Neil HamiltonThe report is published today. The commission was asked to carry out an extensive inquiry into the efficiency and costs of, and the service provided by, the Commonwealth Development Corporation.
The commission is impressed by the dedication with which CDC staff work towards the corporation's objectives. It finds that the CDC is a competent organisation and that it provides a particularly valuable form of assistance to the economies of developing countries. It believes that the CDC's project-based approach, organisation and long-term commitment to its investments are well suited to its objectives. It reports that cash management is effective and that costs are not excessive and are well controlled.
The commission nevertheless concludes that the CDC could continue to make efficiency improvements. The commission recommends in particular that CDC should invest only in projects that, generally, meet specified rate of return thresholds and have an acceptable social and environmental impact; CDC should adopt a policy of charging market rates on its loans; CDC should improve its treatment of risk in projects appraisals; and CDC should set up a representative programme of evaluation and operational projects.
The commission notes some disadvantages in the current policy framework regarding restrictions on CDC's borrowing and liquidity, and the structure of its balance sheet. It believes that these issues should be examined further in the context of the forthcoming five-yearly review of CDC carried out by interested Government Departments and CDC.
The CDC will produce a preliminary response to the commission's findings within three to four months, in the light of which my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs will make a statement.