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WEDNESDAY, OCTOBER 1, 1975
GOVT. AUTHORISED TO BORROW EQUIVALENT OF US$60 MILLION
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THE LEGISLATIVE COUNCIL TODAY PASSED A MOTION AUTHORISING THE GOVERNMENT TO RAISE THE EQUIVALENT OF US$60 MILLION IN LOANS FOR THE PURPOSES OF GENERAL REVENUE.
THE AMOUNT IS US$10 MILLION MORE THAN PREVIOUSLY APPROVED BY COUNCIL ON AUGUST 13 THIS YEAR WHEN THE FINANCIAL SECRETARY, THE HON, PHILIP HADDON-CAVE, SOUGHT LEGISLATIVE COUNCIL AUTHORITY TO PROCEED WITH RAISING THE EQUIVALENT OF A US$50 MILLION LOAN.
EXPLAINING THE REASONS FOR SEEKING A HIGHER LOAN, MR. HADDON- CAVE SAID TODAY THAT AS THE DISCUSSIONS WITH THE PROSPECTIVE LENDERS PROCEEDED ON THE US$50 MILLION LOAN, IT HAD BECOME APPARENT THAT THERE WOULD BE NO DIFFICULTY, AND SOME ADVANTAGE, IN ARRANGING A RATHER LARGER FACILITY IN THIS FIRST VENTURE INTO THE OFFSHORE MARKET.
HE RECALLED THAT AT THE TIME WHEN HE ASKED COUNCIL'S APPROVAL FOR BORROWING THE EQUIVALENT OF US$50 MILLION HE HAD NOTED THAT THE AMOUNT WAS ABOUT AS LOW AS HONG KONG COULD GO IN TAPPING THE OFFSHORE LOAN MARKET IN ORDER TO ESTABLISH A CREDIT RATING.
THE FINANCIAL SECRETARY SAID HE DID NOT ANTICIPATE THAT THE SURPLUSES IN HONG KONG'S RECURRENT ACCOUNT WOULD BE SUFFICIENT TO FINANCE THE DEFICITS IN CAPITAL ACCOUNTS FOR ANOTHER YEAR ON TWO, BUT HE STRESSED THAT HE HAD NO INTENTION OF EXCEEDING THE LIMITS FOR THE CREATION OF PUBLIC DEBT WHICH HE ESTABLISHED IN HIS BUDGET SPEECH LAST FEBRUARY. (AT THE TIME, HE SAID, INTER ALIA, THAT HONG KONG SHOULD NOT BORROW BEYOND A LEVEL WHICH GENERATES DEBT SERVICING CHARGES ABOVE $300 MILLION A YEAR. AND WITHIN THIS LEVEL HONG KONG SHOULD NOT, FÖR BALANCE OF PAYMENT REASONS, RAISE EXTERNAL LOANS WHICH WOULD GENERATE MORE THAN $200 MILLION A YEAR IN DEBT SERVICING CHARGES.)
HE ADDED : +BUT A FACILITY OF US$60 MILLION TO BE DRAWI! DOWN OVER A MAXIMUM PERIOD OF TWO YEARS, RATHER THAN US$50 MILLION, WILL OBVIOUSLY NOT INVOLVE A BREACH OF THESE LIMITS AND CERTAINLY US$60 MILLION WILL NOT BE EXCESSIVE IN RELATION TO OUR LIKELY TOTAL REQUIREMENT OF LOAN FUNDS THIS YEAR AND NEXT.+
THE TERMS OFFERED WERE FAVOURABLE, HE SAID, AND THE DOCUMENTS WOULD BE TABLED IN COUNCIL AS SOON AS THE DOCUMENTS HAD BEEN EXCHANGED BETWEEN HIMSELF AND THE MANAGING BANK OF THE SYNDICATE.
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