CONFIDENTIAL
FM FCO
TO PRIORITY HONG KONG
TELNO 668
OF 161205Z APRIL 92
CONFIDENTIAL
35
111764
MDLOAN 3454
TOP COPY Q DIST?
Pa
FROM: PETER FREEMAN, HEAD OF INTERNATIONAL DIVISION, ODA
34
YOUR TELNO 1022: FINANCING OF AIRPORT CORE PROGRAMME PROJECTS: POSSIBLE ADB LENDING
SUMMARY
1.
SOME QUESTIONS ABOUT PROPOSAL IN TUR.
DETAIL
2. YOUR TUR HAS BEEN PASSED TO ODA, WHO ARE RESPONSIBLE FOR ISSUING INSTRUCTIONS TO OUR EXECUTIVE DIRECTOR AT THE ASIAN DEVELOPMENT BANK (ADB). WE CLEARLY WOULD WISH TO HELP YOU TO CREATE THE BEST POSSIBLE CONDITIONS FOR RAISING MARKET FINANCE FOR THE ACP PROJECTS. HOWEVER WE HAVE A NUMBER OF QUESTIONS ABOUT THE PROPOSAL TO SEEK A LOAN FROM THE ADB.
3.
PARAGRAPH 3 OF TUR REFERS TO YOUR HIGH LEVEL OF ECONOMIC DEVELOPMENT. YOUR GDP PER CAPITA IS INDEED MORE THAN TWICE THE INFORMAL CUT-OFF POINT OF ABOUT US?4,500 AT WHICH REGIONAL MEMBER COUNTRIES ARE EXPECTED TO BE ABLE TO BORROW ON COMMERCIAL MARKETS RATHER THAN FROM THE ADB. WE ARE NOT (NOT) ADVERSE TO SPECIAL PLEADING ON YOUR BEHALF, BUT IT WOULD CLEARLY WEAKEN OUR OVERALL STANCE IN FAVOUR OF DIRECTING ADB RESOURCES AT THE POORER COUNTRIES, AND WE SHOULD WANT TO BE SURE THAT THE BENEFITS WOULD BE WORTHWHILE.
4. ON THE COST OF BORROWING, OTHER NON-BORROWING EAST ASIAN COUNTRIES (EG KOREA) AND SOME TRADITIONAL BORROWERS (EG THAILAND) HAVE RECENTLY BEEN FINDING IT CHEAPER TO BORROW COMMERCIALLY THAN FROM THE ADB. WE PRESUME THIS IS NOT YOUR REASON FOR SEEKING A LOAN. BUT, GIVEN THAT YOU HAVE NOT PREVIOUSLY APPROACHED ADB, IS THERE A DANGER THAT THE MARKETS MIGHT SEE IT AS A SIGN OF WEAKNESS ON YOUR PART (OR OF THE LEVEL OF RISK INVOLVED IN FINANCING THE ACP) RATHER THAN A SIGN OF REASSURANCE? WE RECOGNISE YOU WILL HAVE CONSIDERED THESE ISSUES WITH MORGAN GRENFELL: WE WOULD FIND IT HELPFUL TO UNDERSTAND THEIR AND YOUR ANALYSIS.
1
PAGE CONFIDENTIAL
No comments yet.
Private notes are available after approval.