TNAG-1489-FCO40-2046-Hong-Kong-and-the-Asian-Development-Bank-1986 — Page 119

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7.

The purpose of the Order is therefore to increase the guarantee limit so that Hong Kong can buy its new shares. Bearing in mind the possibility of fluctuations in the exchange rate between the US dollar and sterling, the proposed new limit of £140 million also includes a margin

to cover that contingency.

8.

I have said that the liability for Hong Kong's existing and new callable capital is indefinite. As honourable Members

will be aware, an agreement

an agreement on the future of Hong Kong was signed in Peking in December 1984. Under that agreement, the United Kingdom will restore Hong Kong to the People's Republic of China on 1 July 1997. With that in mind, the Government has discussed the question of the guarantee of Hong Kong's continued membership of the Bank with the Chinese Government. They have confirmed that, if China is a member of the Bank by 1 July 1997, they will assume from that date the The responsibility for Hong Kong's obligations to the Bank. current expectations are that China will formally join the

Bank within the next few months.

shall

9. The Chinese Government have also said that they have no objection to Hong Kong buying shares under the Bank's third

We have made it clear that we general capital increase. consult China about any proposal which would increase Hong Kong's liability to the Bank after 1 July 1997.

10. The United Kingdom will therefore remain the guarantor of Hong Kong's commitments to the Asian Development Bank until 30 June 1997, and the People's Republic of China has agreed to assume that role thereafter.

11. I therefore beg to move.