TNAG-0380-FCO40-426-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 3

GRS 345

EN CLAIR

FM HONGKONG 2406452

ICLASSIFIED

ORWELL

TO ROUTINE FCO TEL BTC 123 OF 24 SEPT. 1973.

PA.

У жидка

to

25. Tx

STERLING.

}

IN SPEECH TO ROTARY ON 21 SEPTEMBER, KILLAR (CHIEF MANAGER OF

CHARTERED BANK) DESCRIBED PROPOSALS FOR EXTENSIONS OF STERLING

GUARANTEE AS VERY UNSATISFACTORY'' AGAINST BACKGROUND OF BRITISH

ECONOMIC OUTLOOK WHICH HE SAID COULD NOT BE VIEWED FAVOURABLY

AS HE HAS DONE ON PREVIOUS OCCASIONS HE REFERRED TO AND IMPLIED

AGREEMENT WITH - CAMBRIDGE ECONOMIC SERVICE FORECAST OF BALANCE

OF PAYMENTS DEFICIT OF OVER POUNDS STERLING 1,000 M. FOR 1973.

HE SUGGESTED THAT HONG KONG HAS BEEN UNFAIRLY TREATED SINCE 1971

BECAUSE THE PARITY BASIS WAS NOT REVISED WHEN U.S. DEVALUED. HE

ALSO CRITICISED CLASHED'' WAS THE PRESS WORDD THE 89 PERCENT

**MINIMUM STERLING PROPORTION, AND SAID THAT IF EXTENSION OF

GUARANTEE IS TO BE ARRANGED IT IS CLEARLY IN HONG KONG'S INTERESTS TO REDUCE THE PROPORTION TO A MORE REASONABLE LEVEL AND ACHIEVE

SOME REASONABLE MEASURE OF DIVERSIFICATION INTO OTHER CURRENCIES"

HE REGRETTED THAT ''U.K. GOVERNMENT HAS COME TO THE NEGOTIATING

TABLE SO LATE IN THE DAY, DESPITE EVERY EFFORT ON THE PART OF THE

HONG KONG GOVERNMENT TO ESTABLISH A DIALOGUE''. HE RECOGNISED

DIFFICULTIES OF FINDING OTHER ALTERNATIVES WHILE MONETARY SITUATION

IS UNCERTAIN.

/IN PRIVATE