HKIOD
IMMEDIATE
HER/CAT A
GRES 350
FM FC 221925Z
DEDIP
REPORUCTED
HK
then enter for
Starling the with.
2fw 1974
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Mr Goodfello
TO IMMEDIATE CANBERRA TEL NO 262 OF 22 MARCH AND TO IMMEDIATE CERTAIN OTHER POSTS INFO IMEDIATE HONG KONG, HAMILTON, BELIZE ROUTINE CONSUL GENERAL CAPETOWN.
M.I.P.T. (NOT TO ALL): EXCHANGE CONTROL.
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38
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FOLLOWING IS TEXT OF PARA 1 6 AND OF THE CHANCELLOR'S MESSAGE.
1. I WANT TO GIVE YOU ADVANCE WARNING, IN STRICT CONFIDENCE, OF CERTAIN EXCHANGE CONTROL MEASURES WHICH I SHALL BE ANNOUNCING IN MY BUDGET ON 26 MARCH,
2. AS YOU WILL KIOW, THE UK FACES A LARGE BALANCE OF PAYMENTS DEFICIT, ONLY IN PART RESULTING FROM THE RECENT INCREASES IN OIL PRICES. IN THESE CIRCUMSTANCES, I HAVE DECIDED THAT ADDITIONAL EXCHANGE CONTROL MEASURES HAVE BECOME NECESSARY TO STRENGTHEN CONTROL OVER THE OUTFLOW OF STERLING FROM THE UK AND TO SUPPLEMENT AND ENCOURAGE OVERSEAS BORROWING. TWO OF THESE MEASURES CONCERN THE OVERSEAS STERLING AREA COUNTRIES.
3. FIRST, I SHALL BE ANNOUNCING RESTRICTIONS ON THE USE OF OFFICIAL EXCHANGE FOR UK DIRECT INVESTMENT OVERSEAS. SO FAR AS INVESTMENT IN OVERSEAS STERLING AREA COUNTRIES IS CONCERNED, UK COMPANIES WILL I FUTURE HORMALLY RE EXPECTED TO FINANCE NEW HIVESTMENT BY FOREIGN CURRENCY DORROWING OR IN A NUMBER OF OTHER PERMITTED WAYS WHICH DO NOT INVOLVE THE USE OF OFFICIAL EXCHANGE. OFFICIAL EXCHANGE WILL ONLY DE AVAILABLE FOR A NARROW CLASS OF EXPORT-PROMOTING PROJECTS, IT WILL ALSO BE POSSIBLE FOR A PROPORTION OF POST-TAX PROFITS OF UK SUBSIDIARIES TO BE RETAINED IN THE SUBSIDIARY,
RISECRET TED
/4.I WANT