XN000022-1982-04-29 — Page 2

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THURSDAY, APRIL 29, 1982

HK MAY NEED ANOTHER LOAN, ADB TOLD

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THE FINANCIAL SECRETARY, MR JOHN BREMRIDGE, TODAY TOLD A MEETING OF THE BOARD OF GOVERNORS OF THE ASIAN DEVELOPMENT BANK THAT HONG KONG MIGHT NEED TO SEEK AGAIN TO INVOKE ITS BORROWING RIGHTS WITH THE BANK.

IN HIS FIRST ADDRESS AS ADB GOVERNOR FOR HONG KONG, TO THE 15TH ANNUAL MEETING OF THE BOARD BEING HELD IN MANILA, MR BREMR IDGE SAID THE PRICE OF LAND IN HONG KONG HAD BEEN FALLING RECENTLY, PARTLY AS A RESULT OF THE LARGE AMOUNT OF LAND SOLD BY THE GOVERNMENT IN RECENT YEARS AND PARTLY BECAUSE OF RELATIVELY HIGH INTEREST RATES.

+THIS IS A WELCOME SHORT TERM ADJUSTMENT WHICH SHOULD FACILITATE ECONOMIC DEVELOPMENT: AND THE GOVERNMENT INTENDS TO CONTINUE TO MAKE AVAILABLE FOR DEVELOPMENT AS MUCH LAND AS POSSIBLE.

+BUT IT ALSO MEANS THAT LAND SALES REVENUE HAS BECOME LESS BUOYANT, AND THAT WE HAVE CONSCIOUSLY BROUGHT OURSELVES NEARER TO THE POSITION IN WHICH WE MAY HAVE TO SEEK ALTERNATIVE FORMS OF FINANCE TO SUSTAIN EXPENDITURE ON OUR CAPITAL WORKS PROGRAMME,+ HE SAID.

MR BREMRIDGE RECALLED THAT AT THE TWO PREVIOUS ANNUAL MEETINGS, WE HAD SAID WE DID NOT PROPOSE TO SEEK ANY FURTHER LOANS FOR THE TIME BEING, BUT THAT WE RESERVED OUR POSITION AS A DEVELOPING MEMBER COUNTRY WITH BORROWING RIGHTS.

WE WERE ABLE TO SAY THIS BECAUSE BUOYANT LAND SALES REVENUE HAD IN RECENT YEARS GREATLY ASSISTED US IN FINANCING OUR CAPITAL WORKS PROGRAMME, HE EXPLAINED.

+BUT WE ALSO SAID THAT AS A CLOSER BALANCE BETWEEN THE DEMAND FOR AND THE SUPPLY OF LAND WAS ACHIEVED, THE SITUATION MIGHT CHANGE AND THAT WE MIGHT THEN HAVE TO LOOK TO LOAN FINANCE TO MEET THE EXPANDING COMMITMENTS ON CAPITAL ACCOUNT NECESSARY TO MAINTAIN LEVELS OF PUBLIC EXPENDITURE CONSISTENT WITH THE NEEDS AND ASPIRATIONS OF OUR COMMUNITY, HE SAID.

MR BREMRIDGE EXPECTED THAT IN THE PRESENT FINANCIAL YEAR, REVENUE FROM LAND SALES AND ELSEWHERE WOULD BE ADEQUATE TO FINANCE A MAJOR PART OF OUR EXPENDITURE ON CAPITAL WORKS.

+THIS VIEW IS REINFORCED BY A SUBSTANTIAL BUDGETARY SURPLUS

IN OUR LAST FINANCIAL YEAR, WHILE THIS YEAR WE ARE AGAIN SO BUDGETING.

+BUT GIVEN THE UNFAVOURABLE CONDITIONS OF WORLD TRADE AND HONG KONG'S DEPENDENCE THEREON, THE PRESENT TREND IN LAND PRICES COULD BE PROLONGED. IN SOME AREAS INDUSTRIAL LAND PRICES HAVE ALREADY DROPPED IN THE PAST YEAR BY OVER 50 PER CENT, THUS EMPHASISING THE VIRTUES OF THE FREE MARKET PROCESS, HE SAID.

/HE ADDEL

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