asked the Chancellor of the Exchequer what progress is being made on the establishment of a new financial support arrangement within the OECD as agreed in principle by the Group of Ten in January; and if he will make a statement.
The text of an agreement has now been drawn up and is being signed in Paris this afternoon by the United Kingdom and nearly all other member countries of the OECD.The scheme is designed to provide, for a limited period, mutual financial support between member countries, supplementing other sources of credit available to members encountering serious economic difficulties. All participants will be allocated quotas, expressed in SDR, which will determine the maximum liability in sharing risks, and the normal proportions of contributions to assist a borrowing member. Amounts borrowed may be up to or beyond the quota of the member concerned, subject to increasing voting majorities. The total of quotas of all OECD members eligible to join the scheme will be SDR 20 billion, and the United Kingdom's share will be SDR 1·6 billion.The new fund, to be known as the Financial Support Fund of the OECD, will not have its own capital but will raise money as required either by borrowing in national and international capital markets in member countries under the multilateral guarantee of all members or through individual contributions and guarantees.The agreement provides for the scheme to begin to operate after ratification by a substantial majority of potential members, and it is hoped to achieve this within 12 months.Her Majesty's Government welcome the establishment of the scheme and intend to bring forward legislation in due course to provide for full United Kingdom participation. A copy of the text of the agreement will be placed in the Library as soon as possible. Details will be published in a White Paper to be made available before legislation is brought forward.