TNAG-0545-FCO40-640-Strength-of-garrison-in-Hong-Kong-1975 — Page 34

CONFIDENTIAL

previous le vel until the release of the land is completed.

3. This agreement shall run for a period of 7 years in the

first instance and shall be renewed on the same terms for .

further periods of 5 years thereafter unless either Government

gives notice a year before the end of any such period that it

wishes to vary the terms.

4. The cost of the garrison is based on price levels at September

1975. The Hong Kong Government contribution as provided for in paragraph 2, will, after setting off the UK Government's share of

expenditure on works services in the manner described in paragraph 6

be paid by quarterly instalments on the last day of each quarter

of the financial year, with adjustments for changes in the price

levels ruling in Hong Kong and the United Kingdom being made as

follows. Before each quarterly payment becomes due, a calculation

will be agreed between the Hong Kong and UK Governments of the

changes necessary to adjust each of the separate components of the cost of the garrison (other than works services) listed in Annex B

to the price levels ruling at the beginning of that quarter.

The indices or other measures to be used in calculating these

adjustments are set out in Annex B, and the adjustments will be

calculated by references to the month by month movements in the

indices and other measures, assuming that one twelfth of the annual

cost of the garrison falls in each month of the year. The instalment

to be paid at the end of June 1976 will include the adjustments so

calculated up to 1st April 1976. Subsequent instalments will include

the adjustments in relation to both the quarter of payment and

the immediately preceding quarter. After the end of the period of

the Agreement, a calculation will be made of any further adjustments

needed and a final settlement will take place.

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