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5.
Hong Kong's current liabilities to the Bank, consisting of
callable capital, a contribution to the current AsDF replenishment
(AsDF IV) and outstanding loans, total the equivalent of some £66 million
We recently obtained Parliamentary approval of an increase in the
statutory limit of our guarantee to £140 million. This was to enable Hong Kong to purchase new shares under the Bank's recent general capital increase costing nearly £41 million. There is thus a margin
within the new statutory limit, which was mainly designed to allow for
possible fluctuations in the exchange rate between Sterling and the
US dollar in which Hong Kong's obligations are denominated. It is
also sufficient to allow for a relatively small new obligation such as
that now proposed.
the United States
6. A replenishment of the Bank's concessional Asian Development Fund resources is currently being negotiated involving the usual OECD donor countries. But i wes suggested by the United States that those developing member countries which contributed to the current replenishment Hong Kong, Indonesia, Korea and Taiwan should be
asked whether they would contribute to the next one.
7.
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P
Following the consequent enquiry from the Bank, Hong Kong has asked
whether HMG would agree to it providing a contribution, of say,
US $1 million which would be the same amount as an AsDF IV. Arguments for a further contribution are evenly balanced. Hong Kong wants to
demonstrate that its continued involvement in the Bank is a reality
which will not cease in 1997 when the colony is returned to China.
8.
Arguments for a small contribution include: demonstrating that Hong Kong is playing a full part as a member of the Bank, and has some-
thing to offer less developed regional partners; meeting the Bank's expectation that Hong Kong is financially strong enough to play a role; and indicating that the Hong Kong Government is confident about future prospects, and its ability to conduct normal business in the lead-up to
1997.
9. Arguments against are primarily financial: a second successive contribution will set a pattern from which it may be difficult to disengage; there is no direct financial benefit to Hong Kong, and it is not certain that goodwill will be a cashable cheque: Hong Kong's future participation in the Bank is assured as China has agreed to take
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