CO129-597-3 Estimates 1950 22-2-1949 - 3-11-1950 — Page 66

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.