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WEDNESDAY, FEBRUARY 26, 1986
+ANYWAY, WE TAKE NO ACCOUNT OF THE PROF ITS ALREADY BEING MADE BY THE KCRC AND WHICH WE EXPECT FROM THE MTRC IN THE MID-1990'S. IT MAY ALSO APPEAR APPROPRIATE ONE DAY TO OFFER A SHAREHOLDING TO THE PUBLIC.+
SIR JOHN SAID THE GOVERNMENT'S MEDIUM-RANGE FORECAST PROJECTED A SURPLUS IN TOTAL CONSOLIDATED CASH FLOW IN 1986-87, FOLLOWED BY A SMALL DEFICIT IN 1987-88 BECAUSE OF A FURTHER EQUITY INJECTION INTO THE MTRC IN THAT YEAR, AND A RETURN TO SURPLUS IN 1988-89. IN 1989-90, THE FORECAST PROVIDED FOR A POSSIBLE FURTHER EQUITY INJECTION INTO THE MTRC AND FOR REPAYMENT OF THE 1984 BOND ISSUE.
+OVER THE FORECAST PERIOD AS A WHOLE THE APPARENT POSITION IS ONE OF A SMALL UNDERLYING SURPLUS OF LESS THAN $600 MILLION. +1 EXPECT THIS TO BE A MINIMUM FIGURE, SIR JOHN SAID.
NEW MOVE IN LIABILITIES COVER *****
THE GOVERNMENT HAD TAKEN A DIFFERENT APPROACH TO THE COVER IT REQUIRED FOR CONTINGENT LIABILITIES FOLLOWING A CRITICAL REVIEW OF INDIVIDUAL ITEMS, SIR JOHN BREMRIDGE SAID IN HIS BUDGET SPEECH.
THE CONCLUSION HAD BEEN THAT THE PREVIOUS DEVICE OF A BLANKET OVERALL COVER OF ONE THIRD OF THE TOTAL VALUE OF CONTINGENT LIABILITIES WAS NOW SOMEWHAT SIMPLISTIC. INSTEAD, THE GOVERNMENT HAD TAKEN A FRESH AND CRITICAL LOOK AT EACH ITEM AND ASSESSED THE NATURE AND AMOUNT OF EACH RISK.
+IN SOME CASES THE EFFECTIVE RISK IS MINIMAL AND IN OTHERS FULLER COVER IS PRUDENT+ SIR JOHN SAID.
+WHILE IT IS IMPRUDENT FOR ME TO QUOTE PUBLICLY OUR ASSESSMENT OF RISK IN EACH CASE, I NOW REGARD A TOTAL COVER OF $7.5 BILLION AS PROPER.
+1 CONTINUE, AS YOU WOULD EXPECT, TO BE SOMEWHAT CONSERVATIVE. THERE ARE ALSO ALL SORTS OF CONTINGENCIES WHICH ANY GOVERNMENT MUST BE PREPARED TO FACE BUT WHICH ARE UNQUANTIFIABLE. WE HAVE IN ADDITION MANY UNQUANTIFIABLE ASSETS.+
SIR JOHN SAID THAT ABOUT $8 BILLION FROM GENERAL REVENUE ACCOUNT BALANCES WAS READILY AVAILABLE TO MEET CASH FLOW FLUCTUATIONS AND TO BE A CUSHION AGAINST POSSIBLE FURTHER SHOCKS. HE WOULD NOT LIKE TO SEE THIS FIGURE GO SIGNIFICANTLY LOWER.
/SIR JOHN