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Mr Furness
IAN DEVELOPMENT BANK ANNUAL MEETING : HONG KONG, 4-6 MAY 1992
Summary
1.
Harmonious meeting with few issues near the point of decision. Timing of general capital increase will be discussed in the Board: management consider it urgent, but have not yet produced convincing evidence. Former Soviet Central Asian Republics (and Russia) attended as Observers, but have yet to decide whether to apply for membership. Iran's application is further advanced. Hong Kong made full use of the meeting's showcase potential its thoughts about a borrowing from the Bank for the Airport programme are still developing. The 1993 Annual Meeting will be held in Manila if security conditions permit.
Detail
2. The 25th Annual Meeting of the Asian Development Bank was held in Hong Kong from 4-6 May 1992. The Hong Kong Government seized the opportunity to advertise the prosperity of Hong Kong and its secure future after 1997. The opening address by Lord Wilson was devoted almost entirely to, this theme, and at Hong Kong Department's request I reinforced it in my speech (copy attached).
Hong Kong Issues
3. The Hong Kong Government are exploring the possibility of a loan from the Asian Development Bank for one or more elements of the Airport project. I discussed this with David Nendick, Secretary for Monetary Affairs in the Hong Kong Government, with the Australian ED who represents Hong Kong, and with AsDB senior officials. Hong Kong has subsequently sent a telegram' explaining that there is no question of a public sector loan (which would require a guarantee from the British and, after 1997, the Chinese Government); but that their financial advisers continue to think that a small (less than US$100m) private sector investment operation by ASDB would help to secure commercial bank finance.
4.
There are two major difficulties: first Hong Kong's GDP per capita is far above the level of present AsDB borrowers.
The plan is to overcome objections by presenting the project as a regional one, bringing substantial benefits to Guangdong province: this will clearly need to be negotiated carefully with the Chinese. Second, the implementing authorities for the Airport projects (one or more of which would be the borrowers) are all public sector, even though in the Hong Kong context they behave as though in the private sector. No solution to this problem is yet apparent, and Hong Kong have asked us for "creative and imaginative" suggestions. While we have an interest in helping Hong Kong secure financing at the
/lowest cost
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