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Wednesday, 24 October 1984
Page: 2421

(Question No. 1159)

Senator Bolkus asked the Minister representing the Minister for Foreign Affairs , upon notice, on 3 October 1984:

(1) What was the position of the Australian representative on the International Monetary Fund (IMF) in the decision to grant South Africa a $1.1 billion loan in December 1982.

(2) Did Pretoria increase 'defence' spending by $1 billion in 1983.

(3) Has the United States Congress subsequently instructed the United States' representatives on the IMF to 'actively oppose' further loans to countries practicing apartheid, despite its view that the IMF should base its decisions purely on economic considerations; if so, and given the ALP's opposition to apartheid, will the Australian Government be taking the same 'actively oppose' position in the IMF if further loans are applied for by South Africa.

Senator Gareth Evans —The Minister for Foreign Affairs has provided the following answer to the honourable senator's question:

(1) The IMF loan referred to was a one year stand-by credit facility of SDR 364 million and a Compensatory Financing Facility of SDR 636 million (a total of approximately $1.1 billion) approved by the IMF Executive Board on 3 November 1982. The Australian Executive Director to the IMF did not speak on this particular occasion as there was already a substantial majority in favour of the loans. On this occasion no formal voting took place, as is the case with most IMF Board decisions. In any event, as the Australian Executive Director represents a constituency comprising eight other nations, the position adopted by the Executive Director on particular issues within the Executive Board does not solely reflect the views of the Australian Government.

(2) According to South African Government figures, South Africa's actual defence expenditure in 1982-83 was Rand 3,128 million (approximately $A2,157.24 million). This expenditure was an increase of Rand 563 million (approximately $ A388.28 million) over South Africa's actual defence expenditure in 1981-82 of Rand 2,565 million (approximately $A1,769.96 million). South Africa's defence expenditure in 1983-84 was Rand 3,349.06 million (approximately $A2,309.7 million) an increase of Rand 221.60 million (approximately $A152.46 million) over 1982-83 defence expenditure.

(3) In November 1983, United States legislation consenting to the quota increase proposed under the Eighth General Review of Quotas was passed. This legislation includes the following provision:

'Sec. 43 (b) The Congress hereby finds that the practice of apartheid results in severe constraints on labour and capital mobility and other highly inefficient labour and capital supply rigidities which contribute to balance of payments deficits in direct contradiction of the goals of the International Monetary Fund. Therefore, the President shall instruct the United States Executive Director of the Fund to actively oppose any facility involving use of Fund Credit by any country which practices apartheid unless the Secretary of the Treasury certifies and documents in writing, upon request, and so notifies and appears, if requested, before the Foreign Relations and Banking, Housing and Urban Affairs Committees of the Senate and the Banking, Finance and Urban Affairs Committee of the House of Representatives, at least twenty-one days in advance of any vote on such drawing, that such drawing: (1) would reduce the severe restraints on labour and capital mobility, through such means as increasing access to education by workers and reducing artificial constraints on worker mobility and substantial reduction of racially-based restrictions on the geographical mobility of labour; (2) would reduce other highly inefficient labour and capital supply rigidities; (3) would benefit economically the majority of the people of any country which practices apartheid; (4) is suffering from a genuine balance of payments imbalance that cannot be met by recourse to private capital markets.

Should the Secretary not meet a request to appear before the aforementioned Committees at least twenty-one days in advance of any vote on any facility involving use of Fund credits by any country practicing apartheid and certify and document in writing that these four conditions have been met, the United States Executive Director shall vote against such program.'

The Australian Government is not in a position to know what instructions have been given to the US Executive Director to the IMF by the United States Administration with respect to this legislation.

The Australian Government will assess issues which come before the IMF Board of Governors and the Executive Board on the basis of the criteria specified in the IMF Articles of Agreement, by-laws, rules, et cetera, as it is obliged to do.