LOANS TO ARGENTINA
6. The IMF has approved loans amounting to about $2.2 billion in support of an economic stabilisation programme. International banks, including British banks signed a short-term bridging facility for $1.1 billion at the end of last year and are still negotiating a $1.5 billion medium-term loan.
DOES THIS HELP ARGENTINA TO PURCHASE ARMS?
7. As my Rt Hon Friend the Chancellor of the Exchequer explained on 24 February, the Argentine Government's capacity to buy arms is likely to be reduced significantly by the introduction of the IMF programme attached to its loan. The programme includes conditions that require substantial adjustments in the Argentine economy which will reduce rather than increase the scope for the purchase of arms.
CAN HMG PREVENT LOANS?
8.
It is for the banks themselves to make their own commercial judgements about their lending policies. They would want to take into account the possibility of obtaining repayment of their existing loans. If Argentina defaulted on these, British banks and individuals would be among the losers. The Government is in touch with developments, but British banks which participate in such operations do not need the consent of HMG or the Bank of England.
WHAT CONDITIONS CAN HMG IMPOSE ON LOANS MADE BY BRITISH BANKS TO FOREIGN BORROWERS?
9. None, other than in most exceptional circumstances.
•
RELATIONS WITH LATIN AMERICA
10. We have no quarrel with Latin America. We are determined to develop our good relations with the region despite the present hiatus in our relations with Argentina.
ARMS EMBARGOES
11. We would have preferred all embargoes to stay in force, but each Government must decide its own policy. We remain concerned that Argentina should not acquire military supplies which would increase the threat against the Falklands, especially as she refuses to issue any unambiguous declaration that hostilities will not be resumed. Our friends and allies are aware of our concern and have assured us they will take this fully into account.
REACTION TO FRENCH DECISION TO DELIVER AM39s AND SUPER ETENDARDS TO ARGENTINA
12. These items are part of the balance of a well known existing contract, dating from well before the conflict, for which licences had already been issued. We are naturally disappointed that deliveries have now been resumed in the absence of any clear