TNAG-0717-FCO40-914-Banking-and-monetary-matters-in-the-Dependent-Territories-is-1978 — Page 59

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

abo

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 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 receipts 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 thaxx

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