TNAG-2100-FCO40-2989-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 41

fact that the HK dollar is currently trading at 15.1:1.

(iii) HMG could state that if the HK dollar in the

future dropped more than 25% below the average rate

over the period 1987-1990, then we would make up the

shortfall.

(iv) HMG could relate the level at which it would step in to augment HMOCS pensions to the sterling equivalent

of the pension of equivalent grades in the UK civil

service; and

(v)

finally we should also ask the Governor whether

there is any possibility of HKG making over to HMG a

capitalised amount which would cover all HMOCS

pensions for service up to 1997. In 1983 this was

calculated to be £210 million. To make over such a

sum for a small group of expatriates in the Hong Kong

civil service would be extraordinarily devisive. It

is most unlikely that the Finance Committee would

approve such a use of the reserves. Nevertheless the

personal views of the Governor should be sought.

30. In summary I recommend that HMG should acknowledge that

the responsibility for sterling safeguards is a matter for

it but state that HMG has not yet made any decisions on what action to take if any. We would then do the minimum

necessary.

ROZAUD/12

A R Paul