(b)
Government guaranteeing all borrowings raised by the
two corporations throughout the life of these loans,
instead of committing itself on contingent liabilities
such as callable equity. The AA and the MTRC are
expected to raise loans in the rough orders of
$36 billion and $40 billion respectively from the
private sector. These loans will not be fully repaid
until 2006 at the earliest. This alternative will
impose a total contingent liability of over
$76 billion for at least 14 years even in a base case,
not to mention additional liabilities involved in any
downside cases.
Lastly, I would like to refer to Ambassador Guo's statement
at JLG XXII, to the effect that the British side was transferring
the bulk of the financial burden onto the SARG. I think this
paper demonstrates that the facts do not support that assertion.
The Hong Kong Government foresees actual costs to be borne before
the new airport is opened to be $59.3 billion at March 1991
prices. Contingent liabilities would amount to about $13 billion
at March 1991 prices. Even if all the liabilities were called,
that would not remotely approach the bulk of expenditure.
as I have pointed out already, contingent liabilities are
expected to be reduced substantially before 1997. Our conclusion
is that our proposals are the most cost-effective way of building
the ACP projects.
But,