TNAG-2251-FCO40-3235-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-fina-1991 — Page 141

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Memorandum

New Airport

of Understanding Concerning the Construction of the

16.

30

June

The

+

Memorandum of Understanding (MOU), initialled on

1991 and to come into operation on signature by Heads

of the British and Chinese Governments, has provided added

certainty to the financing of the ACP in a number of important

areas. Firstly, the understanding that the Chinese Government

will support the construction of the new airport and related

projects will be of crucial importance to securing and

maximising of private funding for the. ACP. Secondly, the

understanding that the Chinese Government will indicate

clearly to interested investors that obligations entered into

or guaranteed by the Hong Kong Government will continue to be

valid and be recognised and protected by the SARG will

faciltate the borrowings to be undertaken directly by the Airport Authority and the Mass Transit Railway Corporation. It

will also facilitate private sector investment in the ACP

through the award of long-term franchises by the Government.

Thirdly, the understanding that the Bank of China will play an appropriate part, for example in the syndication of loans for the airport projects, will be an important signal for the

financial markets. Fourthly, the understanding that the Hong Kong Government will be free to borrow as necessary provided

the total amount of debt to be repaid after 30 June 1997 does

not exceed $5 billion (excluding Exchange Fund Bills and borrowings by statutory corporations such as MTRC and PAA/AA) will provide useful flexibility to the Government in the management of its finances and an extra safety in the event of

adverse conditions. A further cushion is provided in the understanding that the Chinese Government will adopt ક positive attitude to necessary and reasonable borrowing by the Hong Kong Government to be repaid after 30 June 1997.