323.
CONFIDENTIAL #B
機密
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several other estimates and assumptions. Among the more significant of
these are a rise in basic operating costs and the addition of three new
assumptions, namely, that the rate of escalation of operating costs
will exceed that of inflation owing to a rise in the real value of
labour costs; that passenger volumes will cease to grow after 1994;
and higher interest costs. In brief, the current degree of confidence
in the basic assumptions on costs and revenue is considerably stronger
than it was in January.
Loans
26.
Confidence in the availability of finance during the construc-
credit
tion period has greatly increased. Export credit predictions have yet
to be fully confirmed and there remains some doubt as to the degree of
cover that will be available for minor contracts and subcontracts.
Nevertheless, all current indications are that the projected terms
will be available.
27.
The availability of funds in the local bond market is now
more certain and the investment climate will be tested later this
year when Government bonds are issued. Perhaps the most significant
advance is the intention to obtain commitments totalling some
HK$3,000 m. equivalent, for bank loans for 5-7 year periods.
28.
The above souroes provide, between them, a reasonable
assurance that sufficient funds will be available to cover projected
requirements during the construction period. In addition, there are
the less predictable foreign markets, which should be able to provide
longer term funds on a considerable scale.
CONFIDENTIAL
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