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WEDNESDAY, OCTOBER 22, 1975
GOVT SEEKS AUTHORITY TO GUARANTEE MTR LOANS
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THE LEGISLATIVE COUNCIL WAS TODAY ASKED TO AUTHORISE THE FINANCIAL SECRETARY TO GRANT GUARANTEES, ON BEHALF OF THE GOVERNMENT. IN RESPECT OF REPAYMENT OF LOANS AND OTHER INDELTEDNESS INCURRED BY THE MASS TRANSIT RAILWAY CORPORATION.
DEBATE ON THE MOTION WAS ADJOURNED TILL TOMORROW. IF ACCEPTED, IT WILL CLEAR THE WAY FOR THE $5,800 MILLION MASS TRANSIT PROJECT TO PROCEED.
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IN MOVING THE MOTION, THE FINANCIAL SECRETARY, THE HON. PHILIP HADDON-CAVE, SAID IT WAS PROPOSED THAT FINANCE FOR THE PROJECT WOULD BE MADE UP FIRSTLY, OF EXPORT CREDITS GRANTED BY THE COUNTRIES OF ORIGIN OF THE CONTRACTORS, AND SECONDLY, OF OPEN MARKET FINANCE, INCLUDING LOANS IN VARIOUS FORMS RAISED LOCALLY AS WELL AS OVERSEAS.
TOGETHER, THE FUNDS FROM ALL THESE SOURCES WOULD AMOUNT TO HK$5,000 MILLION AND WOULD BE IN ADDITION TO THE GOVERNMENT'S EQUITY CONTRIBUTION OF HK$800 MILLION SET ASIDE IN THE MASS TRANSIT FUND.
AS REGARDS EXPORT CREDITS, THE FINANCIAL SECRETARY SAID IT SHOULD PROVE POSSIBLE TO NEGOTIATE BETWEEN 40 AND 50 PER CENT COVER OF THE TOTAL VALUE OF ALL INTERNATIONAL CONTRACTS OVER A TEN-YEAR PERIOD FROM JANUARY 1980 AT AN AVERAGE RATE OF INTEREST OF 8-1/4 PER CENT PER ANNUM. THIS MEANT THAT THE AGGREGATE AMOUNT OF EXPORT CREDIT FINANCE AVAILADLE WAS LIKELY TO BE ABOUT HK$2,000 MILLION.
AS TO OPEN MARKET FINANCE. MR. HADDON-CAVE SAID IT WOULD BE THE STRATEGY OF THE CORPORATION TO SEEK LONG OR MEDIUM TERM LOANS FROM THE MARKET AT TIMES WHEN THESE ARE AVAILABLE ON FAVOURABLE TERMS.
IN ORDER TO BE ABLE TO TAKE ADVANTAGE OF OPPORTUNITIES AS THEY ARISE, HOWEVER, FINANCE MUST BE AVAILABLE TO MEET PAYMENTS FOR CONTRACTS AS THEY BECOME DUE. THIS WAS THE PURPOSE OF THE SYNDICATED STANDBY FACILITIES WHICH HAD BEEN NEGOTIATED WITH ONE LOCAL AND ONE OVERSEAS BANKING SYNDICATE.
FIRST, HE SAID, A SYNDICATE OF LOCAL BANKS WOULD PROVIDE FACILITIES TO THE CORPORATION OF UP TO HK$500 MILLION AND, SECONDLY, A CONSORTIUM OF OVERSEAS BANKS WOULD PROVIDE SIMILAR FACILITIES UP TO THE US DOLLAR EQUIVALENT OF UP TO HK$2,000 MILLION.
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