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H&B 233/1

FROM: M V Stone

Hong Kong Department

DATE: 1 October 1991

cc: Mr Fish, ODA

Mr Ricketts how in DWTODA We will need to have. He arguments

Mr Burns

1153

@ whom pages against I' marshalled before meeting the Treasury. thed me copied 1431/10

HMOCS MATTERS: LETTER FROM THE TREASURY

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1

1. The attached letter from Mr Mortimer at HMT is about as

positive as we could have expected. The questions asked are

all factual in nature and the ODA have all the material

necessary to reply. I know that they are already working on

the reply and I would hope that we should be able to send

something off before the end of this week.

2.

There's something of a sting in the tail of the letter, at the end of the second last paragraph. Mr Mortimer offers no reason for rejecting the arguments for any form of sterling guarantees. He may be implying that any justification for a sterling safeguard died with the collapse of the Bretton Woods agreement on currencies in

1972. There is also a rather curious reference to the

transfer of assets and liabilities to HMG. Again it is not clear whether he is thinking about some deal over the transfer of assets on 30 June 1997, or whether he is

reverting to a previous Treasury proposal that HKG should make over a capitalised sum to HMG to cover HMOCS pensions.

3.

These areas will need to be explored during a meeting which I hope we shall be able to arrange very soon.

SIPAPG/1

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CC

miz

M V Stone

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