TNAG-1489-FCO40-2046-Hong-Kong-and-the-Asian-Development-Bank-1986 — Page 108

GRS 450

CONFIDENTIAL

FM HONG KONG

TO HIMMEDIATE FCO

CONFIDENTIAL

TOP COPY

HKK 1001

RECLA

GISTRY

- 5 MAR 1986

TELNO 693

OF 050945Z MARCH 86

AND TO IMMEDIATE ODA

INFO HIMMEDIATE PEKING

DEGK

NDEX

PA

AjB 5/31

ASIAN DEVELOPMENT BANKT SECOND CONTRIBUTION BY HONG KONG TO THE

ASIAN DEVELOPMENT FUND

A.D.B. HAVE ASKED WHETHER WE INTEND TO CONTRIBUTE TO THE NEXT

REPLENISHMENT OF THE ASIAN DEVELOPMENT FUND (A.D.F. V) WHICH WILL

COVER THE BANK'S CONCESSIONARY LENDING FROM 1987 90 TO ITS POORER

DEVELOPING MEMBER COUNTRIES. CONTRIBUTIONS ARE PURELY VOLUNTARY.

TRADITIONAL DONORS ARE DEVELOPED COUNTRY MEMBERS, BUT HONG KONG (AND INDONESHA, KOREA AND TAIWAN) CONTRIBUTED, FOR THE FIRST TIME, TO A.D.F. IV. OURS WAS A SYMBOLIC CONTRIBUTION OF US DOLLARS 1M,

FOR DRAW DOWN BY 1992, AGAINST A TOTAL REPLENISHMENT OF MORE THAN

US DOLLARS 3B.

2. ARGUMENTS FOR A FURTHER CONTRIBUTION ARE EVENLY BALANCED. WE

WANT TO DEMONSTRATE THAT HONG KONG'S CONTINUED ACTIVITY IN THE

A.D.B. IS A REALITY WHICH WILL NOT CEASE IN 1997 OR WHEN THE P.P.C.

JOIN THE BANK. AGAINST THIS WE DO NOT WISH TO LOSE THE GROUND

GAINED WITH THE CHINESE IN THE NEGOTIATION OF OUR CONTINUED

MEMBERSHIP.

3. ARGUMENTS FOR A SMALL CONTRIBUTION INCLUDE: DEMONSTRATION THAT

WE ARE PLAYING A FULL PART AS A MEMBER OF THE BANK AND WE HAVE

SOMETHING TO OFFER OUR LESS DEVELOPED REGIONAL PARTNERS SEMICOLON

MEETING THE BANK'S EXPECTATION THAT WE ARE FINANCIALLY STRONG

ENOUGH TO PLAY OUR ROLE SEMICOLON SECURING GOODWILL IN THE BANK

AGAINST THE DAY THAT HONG KONG MIGHT ITSELF REQUIRE TO BORROW FROM

ORDINARY CAPITAL RESOURCES SEMICOLON AND INDICATION THAT HONG KONG

GOVERNMENT IS CONFIDENT ABOUT OUR FUTURE PROSPECTS AND ABILITY TO

CONDUCT NORMAL BUSINESS IN THE LEAD-UP TO 1997.

4. ARGUMENTS AGAINST ARE PRIMARILY FINANCIAL: A SECOND

SUCCESSIVE CONTRIBUTION WILL SET A PATTERN FROM WHICH IT MAY BE

DIFFICULT TO DISENGAGE SEMICOLON THERE IS NO DIRECT FINANCIAL

BENEFIT AND IT IS NOT CERTAIN THAT GOODWILL WILL BE A CASHABLE

CHEQUE. WE HAVE ALREADY DECIDED TO SUBSCRIBE TO THE THIRD GENERAL

CAPITAL INCREASE AND OUR FUTURE PARTICIPATION AT THE BANK IS

ASSURED SEMICOLON NOT ALL DEVELOPING MEMBER COUNTRIES CONTRIBUTED

TO A.D.F. IV (SINGAPORE DID NOT) AND OUR CONTINUED CONTRIBUTION

COULD BE SEEN AS CONFIRMING A MORE ADVANCED STATUS, WITH

IMPLICATIONS ON THE TRADE POLICY FRONT..ma

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