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4.
I must emphasize that this is a purely contingent liability. Expenditure would only be involved if
Hong Kong were to default on its obligations to the Bank; and that is a very remote contingency indeed.
5.
Hong Kong's existing obligations to the Bank are denominated in US dollars. They total some £68 million.
They include Hong Kong's callable subscription of nearly
£32 million to the Bank's capital, an outstanding
contribution of £700,000 to the last replenishment of the
Asian Development Fund, and £36 million in outstanding loans. Hong Kong has received five Bank loans totalling £67.4 million, during the period 1972 to 1980. They were
used to finance a water desalination plant, a sewage
treatment plant, two urban development projects and a
hospital clinic. They should be repaid by 1993. The contribution to the Asian Development Fund should be paid
by 1992. So those two liabilities are short-term. But the liability for the callable capital is indefinite while the
Bank continues to exist.
That
6. Under the third general increase in the Bank's capital, Hong Kong is entitled to purchase 4,935 new shares costing the equivalent of about £41 million in US dollars. would bring the cumulative total of Hong Kong's obligations
to the Bank to nearly £110 million. This would exceed the present statutory limit of £90 million for the UK's guarantee, which was laid down in Section 7(2) of the Overseas Development
and Cooperation Act 1980. Five per cent of this new subscrip- tion will be paid in by Hong Kong over the next eight or nine years, but the remaining 95 per cent will be callable. This
will add to the indefinite liability.
/7.
The purpose of