NOTHING TO BE WRITTEN IN THIS MARGIN
-8-
Against this there is specific cover of only $2 mn.,
6%, and the liability is increasing.
The main risk for the dependencies is clearly that
abou
of redemption, in cases where a backing fund is not
held or when it is insufficient. Not all the courses
that might be undertaken to mitigate or, preferably,
to remove that risk will be applicable to those
territories which have contracts and legislation
which permit them to maintain a full backing fund;
some authorities
but it cannot be excluded that they will wish to
change their procedure in order to make additional
funds available for other purposes.
III. RECOMMENDATIONS
In view of the unpredictability of the market,
the large fluctuations in annual receints with the
resulting difficulties in providing accurate budget
forecasts there is a danger of placing too much
reliance on this particular source of revenue and also
of becoming too dependent over a period of several
years on a single foreign commercial enterprise.
If, however, moderation is shown in the regularity
and volume of issues, the market may continue to be
a significant source of revenue. The primary need
is thus to minimise the risks, and to this end
Governments should submit for scrutiny by HMG all
draft contracts and proposals for individual
programmes well in advance of any deadlines that taxx
may have been imposed by the promotional companies.
Closer involvement by HMG would also help to ensure
that nothing is done to damage the reputations of
the dependencies, the UK or the Crown. Where paners
/have
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