سم
Mr. Newsam
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56
HONG KONG
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DEVELOPMENT LOAN
You asked for a short note explaining how far the possibility of raising a local loan had been explored. I am sorry for the delay, due to the papers not being immediately available.
The raising of a loan was first considered in the middle of 1946. Discussion with the Departments and authorities concerned here, that is the Treasury, the Crown Agents and the Bank of England, disclosed that there was no good prospect of raising money for Hong Kong on reasonable terms in this country, and fürther discussion has therefore proceeded, with the Treasury, the Crown Agents and the Colonial Government, on the basis of a local loan. The total amounts which have been suggested are H.K.4150,000,000 and H.K.$100,000,000.
Our information from Hong Kong 18 that on the assumption that the locàl banks will support the loan and that the local wealthy Chinese can be persuaded to subscribe to the expected extent, a total of between $50-60,000,000 might be raised locally. The prospects of raising further money would depend on the success of the first issue which would be limited to $50,000,000.
The prospects would be better if a statement could be made that, so far as can be foreseen, there is no reason to suppose that the present exchange rate between the H.K. dollar and sterling would be varied. Such a statement, however, cannot be authorised. Hong Kong also suggested that $50,000,000 of the Currency Exchange Fund should be invested in the loan, a suggestion which the Treasury turned down flat. The Governor has been authorised to proceed with the arrangements for raising a loan up to a total of $150,000,000 in all, which it has been suggested might include a premium bond issue of, say, $50,000,000.
All the money raised under this authority is likely to be required for reconstruction and rehabilitation.
We are awaiting the Governor's views on the arrangements to be made for financing the proposed new airport.
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6.11.47.
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