wpu.rmimf92sept27
efensive
CONFIDENTIAL
5.
Airport financing row with China needs to be resolved.
Despite 1991 MOU (Memorandum of Understanding) on Airport, situation temporarily
stalled over question of contingent liabilities (translated as "probable debt" by
Chinese) which China wants included in MOU's HK$5 billion debt ceiling. Airport
land reclamation and site preparation contract recently provisionally awarded despite row. Likely that China is delaying, pending clear views on Governor
Patten's stance on HK domestic politics.
6. ECGD Cover.
On cover, but some worries about degree of concentration of ECGD portfolio.
Cover for Black Point power station has been agreed. UK contractors may also
seek cover for parts of airport project. Such requests will be examined on their
merits as they arise.
7.
New Monetary Arrangements.
was
HK press reported in May that following discussions with Bank of England, HK
planning to amalgamate central banking functions of different government
departments (mainly banking commission and exchange fund) into new central
monetary authority. This referred to confidential review undertaken by Bank at
Financial Secretary's request, into HK's monetary arrangements.
Further progress
on this expected later this year.
Background
8.
Limited
relations with IMF. Article IV consultations held in October 1990
and 1991, with Board discussion in January of following years. Board supportive
of HK economic policies. Chinese also generally supportive. Tentative plans for
HK to host 1997 Annual Meetings.
9.
Real GDP growth recovering (+3.9 per cent in 1991, cf +3.0 per cent in 1990 and +6.6 per cent average in 1980s). Budget forecast is for 5 per cent growth in
Recovery fuelled by strong export growth (31 per cent year-year in June),
growth fuelled by growth in re-exports (40 per cent year-year in June), re-exports mainly to/from China and mainly related to out-processing in southern
1992.
expect
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