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International Development Association: Funding

Volume 447: debated on Tuesday 7 February 1984

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3.2 p.m.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what is their present policy towards the potential shortfall in the International Development Association's budget for 1984–85.

My Lords, I refer the noble Lord to the reply given in another place by my right honourable friend the Minister for Overseas Development on 27th January to the effect that Her Majesty's Government are prepared to make a contribution to supplementary funding of the seventh replenishment of the International Development Association on the basis of the usual equitable burden-sharing among donors.

My Lords, this gives me the unique opportunity of congratulating the Government twice within the last two weeks on the lead which they have taken in this matter. May I ask the noble Lord to clarify some of the words of his honourable friend in another place? These are questions of elucidation. Is it the case that the British contribution will be 195 million dollars or £139 million? If it is, how does this square with the report that the United Kingdom's share has fallen from 10·1 per cent. to 6·5 per cent? Thirdly, when he quotes his honourable friend in another place by referring to equitable burden-sharing among the countries concerned as a condition for the new British contribution, what exactly does that mean? Does it mean that, if one of the other countries defaults or refuses to pay, the British Government will not make their new contribution?

My Lords, the answer to the noble Lord's last question is, no. This does not mean that we should not make a contribution at all but it means that we should not enhance our contribution to make up for any shortfall from some other source. As to the earlier supplementary question that the noble Lord put to me, our contribution to the main replenishment of IDA 7 will be £403 million out of 9 billion dollars, which, as the noble Lord says, is 6·7 per cent., but that does not take into account any supplementary contribution which we may make. That supplementary contribution was taken into account in the earlier contribution of about 10 per cent. which we made to IDA 6.

My Lords, is it not the case that the original target was 16 billion dollars, that this was reduced to 12 billion dollars and that the 12 billion dollars was the sum which the United Kingdom, Japan, Western Germany and France were anxious to achieve; and the reduction to 9 billion dollars (which the noble Lord has just mentioned) is a serious lowering of the level of aid which the United Kingdom was anxious to achieve? Could he say whether the 12 billion dollars is still negotiable, whether there is still a possibility that more might be achieved; or whether the United States is insisting on the 9 billion dollars? If that is the case, why is the United States so anxious to reduce the figure?

My Lords, the 9 billion dollars is the figure which has been agreed among the donors for the main replenishment. We hope that the figure will be made up to around 12 billion dollars by means of supplementary funding and we shall be ready to play our part in that.

My Lords, can my noble friend say whether there is any chance of the supplementary contribution taking into account the fact that apparently British Leyland are thinking of closing down their car and truck division whereas the third world is desperately short of trucks?

My Lords, may I ask the noble Lord two further questions? Is it not the case that, unless the 16 billion dollars is provided for the next tranche starting next July, the work of the IDA will have to be cut because it requires 16 billion dollars just to stand still? Secondly, I was referring to the supplementary amount that the British Government have offered, and I understand that the British Government, along with other governments, are hoping to hold a new meeting later in the year in order to make up some of the shortfall. Can the noble Lord tell us how the arrangements for that meeting are progressing and whether, as happened in the case of Japan and West Germany, it is likely to be deliberately sabotaged by the United States administration?

My Lords, I would not accept the terminology which the noble Lord chose to use at the end of that supplementary question. I can say that negotiations on the creation of the supplementary fund are proceeding and that we hope very much that they will be in place by the 1st July this year.

My Lords, the noble Lord has not answered my first supplementary question. Is it not the case that unless 16 billion dollars are provided for the IDA this year then, according to the World Bank, there will have to be a cut in the operations of the IDA?

My Lords, I do not believe that 16 billion dollars was ever a realistic target for this replenishment. The Government were able to agree to the 12 billion dollar figure to which I referred.