66
nsport development, which is of the greatest urgency and is,
fundamental to the whole economic development of the East African
area. Other cases will follow, and it may thus be expected that a
certain volume of London loans by Colonial Governments, subject always
to the conditions and safeguards which I have outlined, will
take place from now on.
5. The contents of the preceding paragraphs of this despatch
will already be known, at least in part, to some Colonial Governments.
On
I have nevertheless felt it advisable to set out the whole positiun
as clearly as possible. in doing so, I must emphasis once again that
London borrowing by Colonial Governments, besides being only
permissible for approved development for which sufficient non-
financial resources are likely to be available, and besides being
subject to a sufficient assurance that the financial position of
the Colonial Government concerned will be strong enough to bear
both the loan charges and any additional recurrent expenditure
involved in the Development Plan as a whole, can still only be
used as a last recourse. It is essential that financial obstacles
should not stand in the way of approved development which is
practicable so far as non-financial resources are concerned.
the other hand, finance is not at present, in the case of most
fields of development in most Colonial territories, the major
limiting factor, and it is equally essential that financial
facilities should not be allowed to outrun the availability of other
resources, since this can only increase inflationary tendencies and
lead to frustration and delay over the whole developmental field.
It follows that the sources of finance which are already available
to Colonial Governments should in all cases be fully utilised before
recourse is had to the London market, subject always to the paramount.
necessity for Colonial Governments to maintain adequate reserves
against possible eventualities such as a decline in revenues resulting
from any reduction in the present high prices of most Colonial
products.
6.