XN000022-1972-06-21 — Page 7

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Wednesday, June 21, 1972

EXCHANGE FUND BORROWING POWERS INCREASED

The Legislative Council today adopted a motion which increases

the borrowing powers of the Exchange Fund to $7,000 million. The previous

increase to $6,000 million was made in November last year.

The Financial Secretary, the Hon. C.P. Haddon-Cave, told the

Council that the increased borrowing powers had been needed to bring the

sterling assets of the Hong Kong banks under the umbrella of the United

Kingdom sterling guarantec arrangement.

He said that during the seven months since the limit of the

Fund's borrowing powers was fixed, the amount of bank controlled sterling

assets covered by the guarantee arrangement had increased from £325.7

million (34,737.45 million) to £402.2 million ($5,850.2 million). It

therefore followed that the Exchange Fund could only borrow the equivalent

of £10.3 million before the present limit on its borrowing powers was

reached.

Mr. Haddon-Cave said that this balance would not last more than

about three weeks at the rate of increase experienced so far this month.

He said the extent to which the additional borrowing powers

would have to be used and over what period would depend on a number of

fairly unpredictable factors, the main one being the buoyancy of Hong

Kong's current balance of payments position.

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