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Contingent Liability Notification: India Green Guarantee

Volume 705: debated on Thursday 9 December 2021

I have today laid a departmental minute outlining details of a new liability (the India green guarantee) which FCDO plans to undertake in order to guarantee up to US$1 billion (£746 million at the current exchange rate) in lending from the World Bank to India.

It works in more than 170 countries globally to reduce extreme poverty, boost shared prosperity and address global challenges such as climate change.

The India green guarantee to the World Bank will unlock additional lending worth US$1 billion for green projects in India. This financing will be used for projects that address climate change and will be designed to maximise impact through relevant approaches described in the departmental minute.

It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Minister concerned to present a departmental minute to Parliament giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the statement, except in cases of special urgency.

The UK is creating this new liability for two reasons. First, to meet a clear climate financing need. India is pivotal in the global effort to tackle climate change. It is raising its climate ambition but will need enhanced financial support in order to do so. Secondly, to alleviate constraints on World Bank lending to the Government of India. The departmental minute provides further detail on these issues and how the guarantee addresses them.

The liability is expected to last for up to 25 years. FCDO would only pay official development assistance if a default occurs as agreed with the World Bank. The departmental minute sets this out in detail.

HM Treasury has approved the proposal in principle. If, during the period of 14 parliamentary sitting days beginning on the date on which this minute was laid before Parliament, a Member signifies an objection by giving notice of a parliamentary question or by otherwise raising the matter in Parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.

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