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Mr Masao Fujioka
IN CONFIDENCE
Overseas Development Administration
Eland House
Stag Place London SW1E 5DH
Telephone 01-213: 6609
or Switchboard 01-213: 3000
President, Asian Development Bank
Manila
2 April 1986
Dear Mr. President,
UNITED KINGDOM'S GUARANTEE OF HONG KONG'S LIABILITIES TO THE ASIAN DEVELOPMENT BANK
1. Under Article 3 of the Bank's Articles of Agreement, a member is required to guarantee all the obligations which may be incurred by any other member for whose international relations it is responsible, until that member itself assumes such responsibility. As you know, the United Kingdom accepted responsibility under that Article for the obligations of Hong Kong when the territory became a member of the Bank in 1969.
You will also be aware that the joint declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People's Republic of China on the question of Hong Kong was signed in Peking in December 1984 and entered into force on 27 May 1985. Under that agreement, the Government of the United Kingdom will restore Hong Kong to the People's Republic of China with effect from 1 July 1997.
3.
With that in mind, Her Majesty's Government raised with the Government of the People's Republic of China the question of a guarantee after 1 July 1997 of Hong Kong's obligations to the Bank deriving from Hong Kong's membership. The Chinese Government have confirmed through an Exchange of Memoranda in Peking on 14 October 1985 that, on the basis that the People's Republic of China became a member of the Asian Development Bank, they will undertake to
as from 1 July 1997, the guarantees given by the United Kingdom Government of Hong Kong's callable capital subscriptions including its contingent liability under the third general capital increase. I attach a copy of the Exchange of Memoranda between the British and Chinese Governments.
4.
Her
The United Kingdom will therefore remain the guarantor of Hong Kong's obligations to the Bank until 30 June 1997. Majesty's Government have obtained Parliamentary approval to extend the limit of the UK's guarantee, in order to cover the obligations that Hong Kong will incur as a result of its acquisition of shares under the third general capital increase. Hong Kong is therefore now in a position to purchase the new shares.
/5.
IN CONFIDENCE