TNAG-0339-FCO40-375-Aid-to-Hong-Kong-from-UK-1972 — Page 67

FCO Aid Committee

#EFFOVED IN

CONFIDENTIAREGISTRY Ne, 51

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AC(72)3

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THE AID PROGRAMME

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I now attach the revised aid framework papers to which I

referred in my Circular AC(72)2 of 28 February.

2. You will see that the papers at Appendix 1 summarise the revised framework after the proposed cuts have been applied,

while those at Appendix 2 show the effect of the proposed

cuts on the existing framework for the years 1972/73 to 1975/76.

On the two summary sheets the ODA have used the term "over

commitment" to mean what they used to call "estimating adjustment". We have asked Mr Maurice Smith, the Under-

Secretary responsible for ODA's Aid Policy and Finance Divisions to come to the meeting on Friday to explain the revised papers and the criteria adopted in making the proposed cuts.

3. The cuts proposed are for the most part reductions in the size of the increases which would otherwise have been possible. A comparison between the latest estimate of disbursements in 1971/72 and the revised framework provision for 1972/73 is attached at Annex A. This shows that even after the proposed cuts have been applied to the existing framework provisions, future allocations are still higher in most cases than likely disbursements in the current year. Exceptions to this include Ceylon and Turkey. Ghana's action in repudiating debt has of course been taken into account in the revised framework which envisages the restriction of future capital aid to existing commitments.

untouched.

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The provision for technical assistance is largely

In considering ODA's proposals, we should have regard to their effect on the present balance of our aid effort as between multilateral, Commonwealth and foreign aid. In particular we may need to look critically at the very small provision included in the framework to take account of the impact of our entry into the E.E.C. on the shape of the programme. This will not only entail a UK contribution from aid funds to the European Develop- ment Fund (or the Community budget) and the European Investment Bank, but is also likely to have some effect on the volume of UK bilateral aid to the Commonwealth associables and the existing E.E.C. associates.

This

5. We should perhaps look closely too at the 1972/73 Contingencies figure of £7m. Paragraph 4 of the covering ODA note says this may not be enough to meet any new demands. would certainly also be our assessment since additional funds may be necessary to meet requirements in Rhodesia, Malta Zambia and Cyprus and for debt re-scheduling in Pakistan.

Dir d

1 March 1972

CONFIDENTIAL

E M Kerr Secretary