GOVERMENT HOUSE HONG KONG.
NED 14 APR 93 69:41
PG.11
Page
problem as Hong Kong with the Public Accounts Committee if he received less revenue than was due. The situation would be more difficult if Parliament queried why HKG could not pay with its large surplus.
5.
The Governor said that what we were trying to do was to avoid the problem, particularly the political aspects. He would be surprised if the UK PAC would have any major problems. He suggested that an explanation be given through making allowance for the $78 million under-estimates, the normal 5% undershoot from the previous year, and the changes in the Sterling exchange
rate.
6.
but
Mr. Rifkind said that under the terms of the
The Governor ! DCA, HKG was obliged to make the payments.
replied that it was not that HKG did not want to pay, what we hoped to do was to make the payment next year. In replying to Mr. Rifkind's question on whether it would be possible to find a device for the payment to be made this year, S for Tsy said that we would certainly need to
It would seek approval from Legco for additional money. be impossible for him to find under-spending elsewhere to hide the over-spending in the DCA.
7.
As a
The Governor said that the real message was that if we went to the Finance Committee for supplementary provision, the likelihood would be that we wouldn't get it and that the whole DCA would be put to question. result, HKG might not be able to pay for what it had agreed, and that the size of the Garrison would be subject to further queries.
8.
Mr.
The
Mr. Rifkind said that he would try to cooperate with HKG. However, his difficulty was to explain to the UK public why the £16 million could not be received. Governor said that the scale of interest and explanation needed would be less in London than in Hong Kong. Rifkind agreed. Nonetheless, the UK defence budget was also decreasing. He wouldn't have the £16 million to go around. The Treasury would ask him to find his own funds
He was also worried about the to cover the deficit.
Mr. rolling over effect of the deficit to future years. Fraser added that the UK accounts would be closed on 31 March. He would then have to report the £16 million as money not received, and seek supplementary provision to fund the day-to-day operation of the MOD activity in Hong Kong. He also said that the under-spending in the August accounts was only ring-fencing financing and could not be drawn on. The Governor repeated the danger that no money would be received if Finance Committee did not vote the funds. There was also a problem of perception as the Chinese would not ask Hong Kong to pay for military costs in future as provided under the Joint Declaration.
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