TNAG-2251-FCO40-3235-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-fina-1991 — Page 123

CONFIDENTIAL

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FROM: R A Burns

DATE: 28 July 1991

cc: Sir J Coles

Mr Bayne

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HONG KONG AIRPORT: FINANCING

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1. I attach two papers given to me by the new Secretary to the Treasury, Mr K Y Yeung.

I have already passed copies to

Mr Broadbent, who has also talked at length with Mr Yeung.

2.

Paper A sets out the case which could be deployed publicly. Paper B presents the picture in terms of HKG forecasts. Both papers show that the Airport Core Programme is affordable, but it may be a close run thing. Mr Broadbent will be able to expand on these figures more fully. Mr Yeung remains interested in the eventual possibility of pre-selling land at Kai Tak, whether to private developers or to the Airport Authority.

short

3. At my request and arrangement, Mr Broadbent used the opportunity of the HOMC to talk around the HKG about the Government's past economic appraisals of the airport project and about future problems. He will be writing a host report for me on the basis of which I should like to write to the Financial Secretary. Now that the airport project is to go ahead I see no mileage in a critical post mortem on earlier appraisals. But we should offer Hong Kong a constructive dialogue about the financing problems in future.

4. Incidentally, as I told Mr Yeung, we also need to take forward our thinking of the mechanisms for transferring HKG funds to the SARG in 1997 (bearing in mind the kind of things being said by Chen in Peking during our airport talks).

PATAEL

CONFIDENTIAL

Noso for

R A Burns