or we
$5 bn
borrowing limit?
HKA 233
233/1
Reference..
CONFIDENTIAL
Ра
Mr
дох
PENSIONS FUNDING: SOME CALCULATIONS
1.
492
In paragraph 8 of your minute of 7 August you suggest that, unless there is some fatal flaw in the figures, it might be possible for HKG/SARG fully to fund pensions over a reasonable period of time. I think the only problem is that our figures are in 1992 prices and therefore do not take count of the additional, say 7.5%, that should be added to them to show money of the day values. For example, the HK$19.34billion in paragraph 7 (a) would translate into a much larger figure by 1997. (Incidentally it is surprising that the Chinese accepted a figure of only HK$25billion for the reserves in 1997. Translated into 1991 values, this is only HK$15.6 billion deflating at 7.5%.
2.
-
I do not think this invalidates our thoughts but I suspect it does mean that fully funding is not a realistic possibility unless the Exchange Fund can be somehow brought into play.
3. I shall consider further, discussing with Mr Lane, what might be needed for a pensions trust fund.
Mühl ustae.
M V Stone
Hong Kong Department
WH 304 270 2651
11 August 1992
cc: Chris Lane
CODE 18-77
pens.fun.ADM
SLM
Thanks. I think I made clear that these figwes were
a
question of lopping $19 bn 1992, ie it is not just off the projected 1997 reserves; but you may well be
for HICG night that it wd be harder than we suppose
and to sex-aride $3.5bn per year rising by 5% p.a. upgraded for inflation.
The question of 1991 prices or 1997 prices for the reserves sex-aside did come up in the awport negotiations and Rovided some of the justification for ow moving up to $25 bn from the lower figue proposed in April. The Chinese did not handle this very clevery though, reason why Lu hing is so
Al cc des have
CONFIDENTIAL
and it may
Luling is so prickly.
an
12/
be awhe
4.95