TNAG-0448-FCO40-513-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 44

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'B' account at the Bank of England on 20th March (see my cable number 11) in order to comply with the accidental breach pro- vision has been included in (d). A further £10 million purchased on 29th March is included in the advices for 29th March 1974 referred to in sub-paragraphs (a) and (b) of paragraph 1 above, but this £10 million is not included in (d).

3.

In addition to the sterling interest and sterling purchases, sterling cash assets owned by the Hong Kong Government increased by £196,005 in March as a result of an excess of other receipts over payments. I can see no reason for excluding this amount from the compensation calculation, but as FCO Telno 358 of 10th April 1974 only mentions interest and sterling purchased in March to top up our end of February sterling position it has been excluded from the advice identified in sub-paragraph (d) of para- graph 1 above. I should be grateful if you/seek the Treasury's authority for the inclusion of the sum of £196,005 as a part of Hong Kong's eligible sterling reserves.

I would

4.

I should be grateful if you would at this stage seek a payment from the Treasury in respect of that part of the guaranteed portion of official sterling reserves not in dispute; that is to say, in accordance with the modified settlement basis described in FCO Telno 358 of 10th April 1974, with the addition, if possible, of the amount of £196,005 mentioned in paragraph 3.

5.

Compensation under the Sterling Agreement was paid to a suspense account in the name of the Hong Kong Government because it would have been awkward to arrange for reverse payments from a number of separate accounts should this have been necessary later. There is no objection to a similar suspense account being opened to receive compensation payments under the declaration, but as there is no possibility of reverse payments on this occasion we would be quite happy to receive the amount due direct into the Hong Kong Government 'B' account.

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Yours faithfully,

Dony Lesnarly.

(D.W.A. Blye)

Accountant General