Reserves there would still be a substantial Exchange Fund. This would comprise the funds that the note issuing banks have to deposit with the Exchange Fund for the notes issued and also the accumulated surplus in the Exchange Fund from investments. We have been trying to establish from HKG just exactly how much the "net worth" of the Exchange Fund is. They have been coy giving us the figures but the Bank of England has provided us with an estimate drawing from the Exchange Fund audited accounts for 1989. The estimate is that the net worth of the Exchange Fund is approximately HK$65 billion (made up of an "accumulated surplus" of some HK$40 billion and an "exchange equalisation reserve" of about HK$25 billion). We have not confirmed these figures with the Hong Kong Government. The notes issued by the banks at the end of 1989 amounted to about HK$37 billion while the amount the Exchange fund was managing on behalf of the Reserve amounted to HK$52.5 billion. While it cannot be said that Lu Ping's comments are completely inaccurate, it is a fact that HKG has considerable other funds it can draw on to support the Hong Kong Dollar and, of course, if the worst came to the worst, the Bank of England would presumably have to extend HKG lines of credit.
(b) Hong Kong Government are hiding from the public the true cost of the project and the extent of the run down of the Reserves:
1.
Lu Ping has been quoted as saying "just tell them (the Hong Kong public) what we have been told about how the Reserves are to be used, how much of it has to be spent and how much will be left by 1997." He went on to say on 13 December that the SARG could expect to inherit only an insignificant Reserve of several billion dollars: "There will only be some odd dollars left. It will all be spent. What can we do?" Journalists were also briefed on confidential financial information which HKG provided to the Chinese suggesting that HK$64 billion will have to be drawn down from the public coffers to meet the cost of the project. This ties in almost exactly with the HK$5.2 billion that would be left in 1996 (the current HK$70 billion minus HK$64 billion).
I
8. The problems that these comments have raised is that LegCo Council members are now arguing strongly to be presented with more financial details of the various projects. No bad thing in this and in fact the Hong Kong Government have provided LegCo with a breakdown of the essential core projects which adds up to HK$79 billion. fear however that HKG have not played this one particularly sensibly. The public figure that they have released is different from the one given to the Chinese (HK$103 billion). The one given to the Chinese is also different from the one published originally (HK$127 billion). The figure given to the Chinese was for the "airport core programme". This
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