XN000022-1991-05-16 — Page 2

THURSDAY, MAY 16, 1991

HK HAS EXCELLENT ABILITY TO SERVICE AND REPAY DEBT

THIS

THE GOVERNMENT'S PLAN TO ISSUE TWO OR THREE YEAR BONDS LATER YEAR WILL BE AN IMPORTANT MEASURE TO PROVIDE CONTINUITY IN THE MATURITY SPECTRUM OF GOVERNMENT DEBT, PAVING THE WAY FOR THE POSSIBLE ISSUE OF LONGER TERM MATURITIES AT A LATER DATE.

THE FINANCIAL SECRETARY, SIR PIERS JACOBS, SAID THIS AT THE OPENING OF THE CONFERENCE OF ASSOCIATION OF INTERNATIONAL BOND DEALERS THIS (THURSDAY) MORNING.

HE SAID THIS WOULD BE THE LOGICAL NEXT STEP TO TAKE IN ORDER TO DERIVE MAXIMUM BENEFIT FROM THE EFFICIENT MARKET INFRASTRUCTURE THE GOVERNMENT HAD CREATED THROUGH THE EXCHANGE FUND BILLS PROGRAMME .

"PROCEEDS OF THE BOND PROGRAMME WILL BE FOR GOVERNMENT CAPITAL EXPENDITURE 'PURPOSES, WHILE THOSE OF THE EXCHANGE FUND BILLS PROGRAMME WILL CONTINUE TO BE FOR THE ACCOUNT OF THE EXCHANGE FUND.

"THE BORROWER WILL,

HOWEVER, BE THE SAME

THE HONG KONG

GOVERNMENT," HE SAID.

DETAILS OF THE BOND PROGRAMME WERE BEING WORKED OUT BY THE OFFICE OF THE EXCHANGE FUND WHICH WOULD BE CONSULTING POTENTIAL MARKET PARTICIPANTS SOON, SIR PIERS SAID, ADDING THAT HE WAS CONFIDENT OF THE SAME SUPPORT FROM THE MARKET AS IT GAVE FOR THE EXCHANGE FUND BILLS.

HE SAID HE HOPED PROPOSED AMENDMENT LEGISLATION ENABLING GOVERNMENT BONDS TO BE ISSUED IN PAPERLESS FORM AND BE EXEMPTED FROM PROFITS TAX AND STAMP DUTY WOULD RECEIVE THE APPROVAL OF THE LEGISLATIVE COUNCIL DURING THE CURRENT SESSION.

"THIS WILL ENABLE THE BOND PROGRAMME TO START IN THE SECOND HALF OF THIS YEAR, TAKING FULL ADVANTAGE OF THE MOMENTUM INITIATED BY THE EXCHANGE FUND BILLS PROGRAMME, HE SAID.

ON THE GOVERNMENT'S ROLE IN THE DEVELOPMENT OF THE DEBT MARKET + PIERS SAID IT SHOULD BE LIMITED TO FACILITATING, BUT NOT SUBSIDISING, MARKET DEVELOPMENT.

SIR

"IN BRIEF,

WE TAKE THE VIEW THAT, AS FAR AS PRACTICABLE, WE SHOULD LET THE PRIVATE SECTOR GET ON WITH IT."

WHILE THIS ATTITUDE WOULD CONTINUE TO GUIDE THE GOVERNMENT POLICY THINKING, HE SAID THAT AT A TIME WHEN FISCAL OR MONETARY CONDITIONS DID JUSTIFY BRINGING GOVERNMENT DEBT TO THE MARKET, THERE SHOULD BE NO OBJECTION TO DOING SO PRUDENTLY, AND IN A MANNER WHICH WOULD ASSIST IN THE DEVELOPMENT OF THE DEBT MARKET.

"THIS IS, IN FACT, THE STAGE WE ARE GOING MOMENT, HE SAID.

**

THROUGH AT THE

/"WE NOW