Fund staff have visited Hong Kong, and are extremely satisfied with the facilities on offer. If Hong Kong's bid is accepted, some expenditure will need to be incurred before the July 1997
handover to China. The main item will be staff costs for the
planning team; but there will also be advance hire charges for
the Convention Centre and
and office accommodation. Hong Kong estimates that the costs it will incur up to July 1997 will be
some HK$35mn, around £3.5mn at the current rate of exchange.
4. One complication has been that Hong Kong is not a member of the Bank or Fund in its own right. Accordingly, we have been negotiating with the Chinese for over a year about the precise
role the Hong Kong authorities would play; but some politically
sensitive details remain to be settled.
Throughout
the
negotiations, we have been seeking to ensure that
assurances on the provision of facilities and so on in the period
up to 1 July 1997 would be signed by the Hong Kong authorities,
not HMG. Bank and Fund staff, together with the Chinese, have
resisted this. The outcome is a complex package of
of texts,
including a memorandum of understanding (MOU) which would be signed by the Bank and Fund, and UK and Chinese Governors (the
UK with responsibility up to 1 July 1997, the Chinese thereafter). The Treasury Solicitor's clear advice is that, taken together, the package constitutes an assurance by HMG in the period up to 1 July 1997: that it stands behind Hong Kong's obligations to provide services and facilities for the meetings; and that we are very unlikely to be able to secure changes to avoid this without unpicking the whole package. They conclude that, for the purposes of reporting to Parliament, the MOU should be regarded as involving obligations in the nature of a contingent liability. The liability relates solely to Hong Kong's undertakings to provide specified services and facilities. There would be no liability on HMG if, for whatever reason, the
location of the annual meeting had to be shifted from Hong Kong
at short notice.
5. Provided some proposed Chinese amendments which bear on Hong Kong's autonomy can be satisfactorily resolved, Hong Kong remains
/very
•