TNAG-2024-FCO40-2886-Relations-between-Hong-Kong-and-Commonwealth-countries-1990 — Page 52

CONFIDENTIAL

14.

our contribution over

The UK's contribution

UK is largest single contributor to the subsidy cost (ie

grants or gi

equivalent), to subsidise lending of up to SDR 1 billion ($1.3 billion) over the

life of the scheme, with a ceiling of £327 million оп

14 years. Fund is still looking for more contributions.

is intended to be one sixth of the final total of grants. In view of slow rate

of disbursement from the ESAF so far, we are currently negotiating a reduction in

UK contributions for 1990-91 and 1991-92. The UK

UK already has SDR 34 million

($44 million) held in the interest subsidy account. We believe

contribution is required in 1990-91. Fund staff are arguing for a contribution

of £6 milion as a "demonstration of continued support for the ESAF Trust."

no new

15. So far 11 ESAF programmes have been approved (Bolivia, Gambia, Ghana, Kenya,

Madagascar, Malawi, Mauritania, Niger, Senegal, Togo and Uganda). Total

commitments are around SDR 1.37 billion ($1.78 billion). These first cases have

mainly involved countries with a reasonable record of adjustment. Adjustment

under ESAF should be significantly stronger than under SAF. However, it has been difficult to quantify the direct results of new policies and additional finance.

Other members

16. The rate of progress in initiating new programmes has slowed in the past

year. A new programme for Mozambique is under consideration.

thought likely to undertake programs are Lesotho and Tanzania. Two major possible users are Nigeria though there is resistance from some quarters on the grounds that it is insufficiently poor and Zambia, if its arrears are repaid.

17.

suggestions

on

There is substantial funding still available to accommodate the

for use of ESAF put forward during the current debate on arrears strategy. These suggestions include use of ESAF to fund FMP rights and use of ESAF for follow

UK also favours consideration of use of programmes.

ESAF for CCFF (the

contingency programme), hitherto only financed by ordinary (non-concessional) resources, and therefore very unattractive to members most in need of contingency finance to shield them against exogenous factors, such as sharp changes in

commodity prices.

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