§ Mr. Gordon Wilson
asked the Chancellor of the Exchequer if he will list the borrowers who have drawn upon the Iranian Government's line of credit of $1,200 million since July 1974, the amounts so drawn, the purpose for which drawn, and the cost to the Exchequer, if any, of any guarantee for repayment at real values following upon the devaluation of sterling as at the most approximate date.
§ Mr. Dell
The only drawing so far on the Iranian Government's $1,200 million line of credit is the $400 million borrowed by the National Water Council in November336W 1974. The proceeds are being used to finance the capital investment programme of the water industry in England and Wales. The Treasury has guaranteed the repayment of the principal of $400 million.
The loan was under the exchange cover scheme which applies to most public sector borrowing in foreign currencies. Under this scheme the Government relieve the borrower of the exchange risk, and in return receive all but about 1 per cent. of the interest rate advantage of borrowing in dollars rather than sterling. The cost to the Exchequer, if any, of cover in this case cannot be estimated now, as it will depend on the exchange rate between the dollar and sterling at the time of repayment, in 1979, and on the movement of interest rates during the life of the loan.