wpu.rmimf92sept27
CONFIDENTIAL
1992 IMF/IBRD ANNUAL MEETINGS AND COMMONWEALTH FINANCE MINISTERS' MEETING
Brief No 12(ii)
HONG KONG
Financial Secretary: Hamish McLeod, Secretary of Monetary Affairs: David Nendick
Objectives
1.
Welcome recovery in economic growth and improvement in inflation. Endorse fiscal prudence, especially with respect to Airport project.
Line to Take
2. Stress importance of fixed exchange link.
Confidence resulting from stable link outweighs disadvantages from smaller role
of of monetary policy in combatting inflation.
payments surpluses
exchange link.
resulted
balance Past prosperity and
from sound economic management, including fixed
3. Note inflationary pressures.
rising although
recent
Note persistent inflation generated by tightness in labour market and shortage of
land. Property prices and real wages still wage-settlements more flexible between sectors and unemployment has rise to 2 per cent. Increase use of cheaper resources in Southern China, selective labour importation scheme and continued fiscal restraint should cushion against further
inflationary pressures.
4.
Note high level of foreign reserves.
Recently published (previously secret) figures show foreign exchange reserves US$28.9 billion 12th largest in world and second largest in per capita terms.
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