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Overseas Aid Policy

Volume 984: debated on Monday 12 May 1980

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asked the Lord Privy Seal whether, when considering payments of overseas aid, he will take into account losses caused to British companies owing to the failure of foreign governments to honour guarantees.

All relevant factors are taken into account when considering allocations of overseas aid.

Is my hon. Friend aware of the correspondence that I have had with him and other Ministers about the failure of the Government of Nepal to ensure that a debt owed to a British company is paid? Does my hon. Friend accept that in such circumstances British companies are entitled to look for support from the British Government and that our aid programme should take account of any failure to honour obligations?

My hon. Friend should recognise that the British Government have given the firm all support that they can through diplomatic channels. It is doubtful whether the proposal to cut off aid would help because aid improves the economy and makes it more possible for Governments to settle commercial claims. One of the problems is that the firm obtained a guarantee from the Nepal Government for the repayment of capital but failed to get it for the repayment of interest. It is that which is outstanding.

As it is a subject close to my hon. Friend's heart, can he say whether any progress is being made in developing European Community credit guarantees to cover mineral developments in the Third world? If they can be developed, would not that be of great assistance to the Third world and to mining companies in Britain?