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Assessment of "sovereign risk"
The Government can play a pivotal role in ensuring a proper understanding of issues that would affect the assessment of the "sovereign risk", Secretary for Financial Services, Mr Michael Cartland, said this (Tuesday) morning.
Speaking at the Conference on Credit Ratings and Risk Assessment in Asia's Emerging Markets, Mr Cartland said the first step was to provide the necessary primary information, such as trade and economic data, budgetary and fiscal position.
"As regards qualitative assessments, such as the assessment of political risk and economic outlook, we always ensure frank and open dialogue with the rating agencies, and explain as far as we can issues of concern to them," he said.
Mr Cartland said issues which might be of concern to the rating agencies would inevitably vary among different "sovereigns".
However, he said, the key to a fair and appropriate assessment must be
transparency.
"In Hong Kong, for instance, our financial and economic strength is seldom in question.
"But we have always found it useful to explain to the rating agencies matters such as our philosophy of fiscal prudence, the importance we attach to maintaining exchange rate stability as our monetary policy objective, transitional issues, such as the provisions of the Joint Declaration, an international agreement binding on both the UK and Chinese governments, and the Basic Law, enacted by China to give effect to the 'one country, two systems' concept and the high degree of autonomy that the future Hong Kong Special Administrative Region Government will enjoy in its commercial, financial, economic and fiscal affairs," he said.
He added that it was not just a question of pointing out what the formal, agreed arrangements would be for 1997.
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"Rather it's what lies behind the formalities that is usually missed that there will in fact be continuity - continuity of the way of life, continuity in the Government, continuity in the principles, practices and systems under which Hong Kong has lived and prospered.