CONFIDENTIAL #
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to
staff unless the likely
Government subsidy.
shortfall
could be met by a
It would be politically difficult, if
not impossible, to justify such a subsidy from public funds.
20.
serious
supported.
has serious
The proposed exchange rate hedging scheme has
political implications and again cannot be
It could be construed as implying that Government
doubts over the future strength of the Hong Kong
addition, the costs to Government estimated at
$254 million over the first ten years, to provide a peg at a
rate of US$1.00: HK$7.75 for Civil Service pension payments,
would be difficult to justify publicly.
dollar.
In
Partial Funding
21.
This
maintaining
and
time
to
proposal
originally involved setting aside
a separate reserve fund sufficient at any
meet estimated pension payments for the next five
It would only be used if recurrent revenue were
insufficient to cover pension payments.
years.
22.
The sum involved in pursuing this proposal is
A 5-year roll forward reserve fund would
considerable.
require an initial sum of $15 billion. We have difficulties
in
supporting
problems in
a 5-year roll forward reserve fund because of
finding a sum of this magnitude and because it
G.F. 326
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Annex D
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