TNAG-0423-FCO40-469-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 59

Copy for A.C. Stuart, Esq., F.C.O.

BANK OF ENGLAND

145

[Dear Ron,]

5th July 1973.

38 147

138

Hong Kong Mass Transit System

At E.C.G.D.'s request wo have calculated the export credit subsidy elements for this project using the revised financial schedule and incorporating the latest proposals as outlined in Kon Cottorill's lottor of 2nd July.

Our first calculation makes allowance for the alteration in the starting date for the repayment of capital, and for tho capitalisation of intorost. The second, in addition, attempts to take into effect the possiblo E.E.C. participation.

1.

Financing for 85% of the value of U.K. goods and services plus financing for local costs of the cquivalent of 15% of the U.. clement. Ropayments of principal do not begin until after tho completion of stago four and pro-completion interest payments aro capitalised over the same period (including interest on interest). The cxports are assumed to have a 100% U.K. content.

H.K. mms.

Prosent value of loan

(a) 2,553.2

Prosent value of receipts

(capital and interest)

(b) 1,775.5

Prosent value of exports

(assuming that the timing of

exports coincides with that of the loan dravings)

(c) 2,147.1

This results in a subsidy to U.K. exports [(a)-(b) as a percentage of (c)] of 36.2%.

The subsidy elemont in the financing [(a)-(b) as a percentage of (a)] is 30.4%.