90'd THIOL
20/08 '93 13:54
0712706329
EMT INT. FINANCE
ifl.zb/Aug 93/20.8.2
RESTRICTED
002
I
suggest therefore redrafting the first tvo sentences of paragraph 2 of the telegram to read as follows:
"It has been clear for some time that we would not be able to moet the fast timetable and settle matters before the Annual IMF/World Bank
Bank meetings. In order to avoid to process straddling the meetings, ve would letters
not want the of invitätion to issue until after Nevertheless,
September. we wish to be clear on where we stand the substance of the outstanding points and plan to submit to [Treasury] Ministers in early September along the lines set out below".
4.
If
I am a little unclear as to what is proposed in paragraph Hong Kong is to sign an MOU direct with the Fund/Bank, the text of the Fund/Bank standard MOU will surely need to be amended. would need to be amended anyway to make clear that it applied only It to expenses incurred up to 30 June 1997. But there will also need to be amendment to make clear who is the "Government" signatory. As well as accepting that Hong Kong should sign the MOU, the Fund/ Bank need to accept that they are signing on behalf of the Hong Kong authorities.
It is also important that UKDel do not hold out to the the possibility of the UK transmitting an MOU signed by Hong Kong Fund/Bank authorities until we have the legal advisers and Ministers views if indeed we put this option to Ministers. I suggest, therefore, redrafting paragraph i to read as follows:
"Assurances on agreed contribution. We attach very considerable importance, in terms of upholding Hong Kong's autonomy and avoiding contingent liabilities for HMG, to an arrangement whereby Hong Kong sign an MOU direct with Fund/Bank as suggested in Hong Kong's TUR, and that the standard Fund/Bank MOU 18 amended accordingly to reflect Hong Kong's autonomous position. If the Fund/Bank assumption of responsibility for, or create a legitimate expectation that HMG would meet the consequences of, any financial default. We are consulting the legal advisers on the point. The possibility should not, repeat not, be herd out to Fund/Bank staff at this stage.
Jours,
J CUNLIFFE
Jon.
90'd
EPPE OLZ 1¿O
003 suottery wooog
02:ÞI £661-9NY-02