XN000022-1991-05-15 — Page 19

LOANS (AMENDMENT)

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WEDNESDAY, MAY 15, 1991

BILL 1991 INTRODUCED

A BILL TO EMPOWER THE GOVERNMENT TO ISSUE BONDS, PROMISSORY NOTES OR OTHER INSTRUMENTS IN A PAPERLESS FORM WAS INTRODUCED INTO THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).

MOVING THE SECOND READING OF THE LOANS (AMENDMENT) BILL 1991, THE FINANCIAL SECRETARY, THE HON SIR PIERS JACOBS, POINTED OUT THAT IN HIS BUDGET SPEECH EARLIER THIS YEAR, HE HAD SAID A WELL STRUCTURED AND MANAGED BORROWING PROGRAMME THROUGH THE ISSUE OF SHORT-TERM GOVERNMENT BONDS WOULD NOW BE APPROPRIATE FOR HONG KONG.

HE HAD ALSO ANNOUNCED HIS INTENTION TO START THE PROGRAMME OF GOVERNMENT BONDS WITH ISSUES OF TWO OR THREE YEAR MATURITIES.

"THE SUCCESSFUL EXPERIENCE WITH THE EXCHANGE FUND BILLS MARKET POINTS CLEARLY TO THE ADVANTAGE OF A PAPERLESS

++ MARKET, SIR PIERS SAID.

HE SAID THE COMPUTERISED REGISTER OF EXCHANGE FUND BILLS MADE TRANSFER OF BILLS BETWEEN ACCOUNTS QUICKER.

AS A RESULT, AN ACTIVE AND HENCE LIQUID MARKET WAS CREATED. THAT, IN TURN, LOWERED BORROWING COSTS, HE CONTINUED.

"IT IS BOTH COST-EFFECTIVE AND LOGICAL FOR THE GOVERNMENT BONDS TO BE ISSUED IN PAPERLESS FORM, SIR PIERS SAID.

Fi

"MARKETS FOR GOVERNMENT DEBT IN LEADING FINANCIAL CENTRES ARE GRADUALLY MOVING TO PAPERLESS SYSTEMS.

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AND

HOWEVER, THE FINANCIAL SECRETARY STRESSED THAT THE PROCEEDS THE BORROWING PROGRAMME WOULD BE USED ONLY FOR CAPITAL PROJECTS THAT THE GOVERNMENT WOULD NOT, UNDER ANY CIRCUMSTANCES, BE BORROWING TO FUND RECURRENT EXPENDITURE.

SIR PIERS SAID THE BILL ALSO SOUGHT TO EMPOWER HIM ΤΟ EXCLUDE AGREEMENTS RELATED TO THE BONDS, PROMISSORY NOTES OR OTHER INSTRUMENTS FROM THE STATUTORY REQUIREMENT THAT A COPY OF A LOAN AGREEMENT BETWEEN THE GOVERNMENT AND A LENDER BE TABLED IN THE LEGISLATIVE COUNCIL.

"WITHOUT THIS AMENDMENT, A DOCUMENT SETTING OUT THE TERMS AND CONDITIONS ON WHICH THE BONDS ARE ISSUED AND THE NAMES OF THE SUBSCRIBERS AND DETAILS OF THEIR BIDS WOULD HAVE то BE LAID BEFORE THIS COUNCIL, HE SAID.

WILL NOT WISH

"FOR COMMERCIAL REASONS, POTENTIAL SUBSCRIBERS TO MAKE SUCH INFORMATION PUBLIC, AND THIS WOULD INHIBIT THE DEVELOPMENT OF THE BONDS PROGRAMME, ** SIR PIERS ADDED.

DEBATE ON THE BILL WAS ADJOURNED.

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