FRIDAY, JANUARY 28, 1994
2
FS COMMENTS ON AIRPORT FINANCING
THE FINANCIAL SECRETARY, SIR HAMISH MACLEOD, SAID TODAY: "WE ARE ASTONISHED BY REPORTS WHICH ALLEGE IT WAS CLEARLY UNDERSTOOD DURING SIR PERCY CRADOCK'S TALKS IN PEKING THAT THE $5 BILLION LIMIT ON HONG KONG GOVERNMENT BORROWINGS APPLIED ALSO TO BORROWINGS PROVISIONAL AIRPORT AUTHORITY (PAA) AND CORPORATION (MTRC).
MASS
TRANSIT
BY THE RAILWAY
"LET US BE ABSOLUTELY CLEAR: THERE WAS NO SECRET UNDERSTANDING ON THE MEANING OF THE $5 BILLION HONG KONG GOVERNMENT BORROWING CLAUSE IN THE MEMORANDUM OF UNDERSTANDING (MOU).
"THE ONLY DEAL THAT WAS MADE WAS THE MOU ITSELF WHICH WAS MADE PUBLIC ON JULY 4, 1991.
"IT SEEMS STRANGE THAT THIS REPORTED SECRET UNDERSTANDING HAS NOT BEEN MENTIONED BEFORE, NEITHER IN PUBLIC NOR IN PRIVATE, DURING THE TWO-AND-A-HALF YEARS THAT HAVE ELAPSED SINCE THE MOU WAS
PUBLISHED.
J
"THE MOU SAYS THAT THE HONG KONG GOVERNMENT 'WILL BE FREE то BORROW AS NECESSARY' WHILE INFORMING THE CHINESE GOVERNMENT OF BORROWINGS UP TO $5 BILLION. IT THEN SAYS THAT 'A COMMON VIEW' WILL HAVE TO BE REACHED TO GO ABOVE THE $5 BILLION.
"BUT THAT CLAUSE ONLY REFERS TO BORROWING BY THE HONG KONG GOVERNMENT, NOT BORROWINGS BY THE PAA AND MTRC.
THAT PAA
"THOSE WHO ARGUE, AGAINST THE PLAIN MEANING OF THE WORDS, BORROWING BY THE HONG KONG GOVERNMENT INCLUDES BORROWING BY THE AND MTRC, CONVENIENTLY OVERLOOK ANOTHER CLAUSE OF THE MOU. THIS REQUIRES CONSULTATION WITH THE CHINESE SIDE BEFORE THE HONG KONG GOVERNMENT 'GUARANTEES AIRPORT RELATED DEBT STRADDLING JUNE 30, 1997',
"THIS IS THE CLAUSE THAT DEALS WITH NON-GOVERNMENT DEBT, NOT THE CLAUSE ON THE $5 BILLION. I SHOULD ALSO ADD THAT WE ARE NOT PROPOSING TO GUARANTEE ANY PAA AND MTRC BORROWINGS BECAUSE THE PROJECTS ARE SO STRONG FINANCIALLY THAT SUCH GUARANTEES ARE LIKELY TO BE NEEDED.
"SO THERE CAN BE NO DOUBT THAT BORROWINGS BY THE PAA ARE OUTSIDE THE $5 BILLION FIGURE. THIS WAS MADE ABSOLUTELY SENIOR HONG KONG GOVERNMENT OFFICIALS AT THE TIME, AND RESTATED MANY TIMES EVER SINCE.
"THIS COMMON SENSE INTERPRETATION IS ALSO ENTIRELY WITH THE WHOLE HISTORY OF THE AIRPORT TALKS AT THE TIME."
NOT
AND MTRC CLEAR BY HAS BEEN
IN LINE
SIR HAMISH SAID FROM THE TIME WHEN THE HONG KONG GOVERNMENT FIRST ANNOUNCED ITS INTENTION TO PROCEED WITH THE AIRPORT, IT CITED THE SUCCESSFUL CASE OF THE MTRC AS THE MODEL IT WISHED TO FOLLOW NOT JUST, AS IS WELL KNOWN, FOR THE AIRPORT CORPORATION BILL, BUT ALSO FOR FINANCING.
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HE EXPLAINED THAT THE MTRC HAD PREVIOUSLY ENGAGED IN TWO SORTS OF BORROWING BORROWING GUARANTEED BY THE HONG KONG GOVERNMENT, AND BORROWING NOT GUARANTEED.
/THE DIFFERENCE