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Hong Kong will have to raise a loan on London in 1952, or 1953 at the latest. Until then,
Until then, surplus balances and Crown Agents' advances from the J.C.F. on the security of a London Loan Ordinance will probably enable the Colony to meet the expenditure up to the time of raising the loan. It would be desirable not to raise more than was essential to cover past expenditure and expenditure over the following, (say) two years, and something less than £6 millions might suffice as a first issue. On the other hand the new airport may by then have reached a stage, when a loan will be required to complete the project, and there are the other big development schemes referred to in paragraph 35 of the Estimates despatch. Hong Kong would, however, require a fim understanding that the Colony would be allowed to raise a London loan, before it could commit itself to starting the Tai Lam Chung project, We should in that evant require the usual undertaking from you that, provided all local sources were first utilised, (involving increased taxation) and subject to the approval of the 0.1.C. and subject to the state of the market at the time, the Treasury would be willing in principle to allow Hong Kong to raise a loan m London of up to EX millions in 1952 or 1953 as the case may be, if necessary, with the backing of His Majesty's Government; guarantee as to interest and capital, It does not seen at this date to be very precise as to details but it is necessary to have your agreement in principle to a London loan, so as to enable the Colony to proceed with the water supply project.
OSSID e
6. You will probably wish to discuss the matter with us at a mutually convenient opportunity, in view of the various incertain factors. In the meantime I should be grateful for any comments Kieks may wish to offer. although I understand that if the loan were guaranteed by His Majesty's Government it would have to be floaded by the Bank of England.
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