§ Mr. Ovenden
asked the Secretary of State for Trade what measures are being taken to facilitate the switch to foreign currency financing of exports, referred to in the Chancellor of the Exchequer's statement of 15th December 1976.
§ Mr. Dell
ECGD is taking a number of steps in respect of buyer credit business to ensure the necessary extent of this switch and to assist the exporters concerned.
In future ECGD will underwrite larger project cases only where these are financed in foreign currency. Also, foreign currency financing will normally be required for all project business with certain countries, and will be actively sought in a number of others. ECGD-guaranteed sterling finance will no longer be available for contracts requiring support for non-United Kingdom elements, and general purpose sterling lines of credit will not be established or renewed unless previous lines have been used fully and rapidly.
To assist in this process, interest rates for foreign currency buyer credits will be held to the minimum levels established under the international guidelines which I announced on 15th June last. In my announcement on 4th August last about improvements in ECGD cover for contracts in foreign currencies generally I said that an extra premium would be charged to exporters utilising such cover for buyer credit business. I have now decided that ECGD's premium requirement in this respect will be spread over its whole buyer credit business, sterling and foreign currency alike, and this has already been allowed for in the premium increases announced this week. Also, under ECGD's cost escalation cover, eligible foreign currency credit contracts will in future enjoy the more favourable terms hitherto applicable to cash contracts only. Finally, ECGD has set up a small unit to help exporters in making the necessary arrangements in order to minimise any problems which may be encountered with this new form of financing.
ECGD is circulating to the exporters most concerned details of all the above 173W measures, which will, I believe, help to bring about the major switch to foreign currency financing of exports which is of needed to produce the required savings in public expenditure.