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International Monetary Fund

Volume 923: debated on Monday 20 December 1976

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44.

asked the Chancellor of the Duchy of Lancaster when he last met the Chairman of the International Monetary Fund.

May the House take it from that answer that the right hon. Gentleman has not met the Chairman of the IMF? If he meets the Chairman of the IMF, will he ask him whether he thinks that it is sensible for this country to borrow £8,700 million next year?

I do not know whether the hon. Gentleman is confusing the role of Chairman of the IMF, which rotates among the members, with the Managing Director,,Dr. Witteveen. I suspect that he and perhaps many others are in that state of confusion. This is not the kind of general question that is addressed to the Managing Director or the Chairman of the International Monetary Fund, and I therefore do not propose to address it. Neither does it seem to me to be a question relevant to the Question tabled by the hon. Gentleman.

Are we to understand, therefore, that the IMF now issues its orders to the British Cabinet without ever even meeting its members?

I must do my best in the classical manner for my hon. Friend's understanding, but the IMF does not issue orders to the British Government. The British Government's policies derive from decisions of the British Cabinet as supported by Members of the House, and not from the IMF.

Did the Chancellor play any part at all in negotiating the IMF loan? If he did, will he tell us in what eventuality the full loan would not be forthcoming?

As the answer to the first part of the question is "No", nothing interesting can be given by way of answer to the second part.

When my right hon. Friend was in Washington, did he have the misfortune to meet Professor Milton Friedman? If so, did he explain to Professor Friedman that the advice that he gave to Chile to keep inflation and unemployment down has not worked, that under the so-called free enterprise system in that country inflation and unemployment have increased and Chile has got into a hell of a mess, and that we do not need advice from people like him?

In recent months the only contacts I have had with Professor Friedman have been televisual, and that did not give me the opportunity to make the comprehensive comment that my hon. Friend would have wished. When I meet Professor Friedman next, I could perhaps exchange many interesting views with him.

:Despite the initial answer, will the Chancellor say when he expects the draft articles and initial quotas to be ratified and whether the quotas will be substantially less than the $3·9 billion for which we originally applied?

The hon. Gentleman seems to have it in his mind that we applied for $6·9 billion—

Oh, $3·9 billion. The hon. Gentleman ought to read the Letter of Intent and the agreement that has been reached. I am not in a position, without notice, to give him the technical details for which the has asked about the dates of ratification and the like. I do not think he ought to worry about the IMF fulfilling its commitments to Her Majesty's Government in terms of the loan.

If the IMF trusts the Government as much as the right hon. Gentleman implied, why is the loan coming in such humiliating instalments, as though we were a fifth-rate banana republic?

That remark betrays an innocence on the part of the hon. Member which he displays over a wide range of topics. These are the usual terms of loan from the IMF, and they have been applied to Governments of the hon. Member's own political complexion. An IMF loan either is or is not a begging bowl operation. If it is a begging bowl operation, it applies to Conservative Governments as well as to Labour Governments.

The hon. Gentleman who says that no Conservative Government have ever applied for a loan is also showing a degree of innocence on this subject. These are the normal terms of the IMF. They are not humiliating and have nothing to do with bankruptcy. They have a great deal to do with the organised institutional financial co-operation on which the future prosperity of the countries of the world will depend.