TNAG-2515-FCO40-3669-Future-of-Hong-Kong-International-Rights-and-Obligations-Sub-1992 — Page 90

For information on

7 April 1992

CONFIDENTIAL HKC 031/9

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NOTE FOR EXECUTIVE COUNCIL

ARTICLE IV CONSULTATIONS WITH THE INTERNATIONAL MONETARY FUND (IMF)

INTRODUCTION

This memorandum informs Members of the discussions by the IMF Executive Board on the findings of the 1991 Article IV consultations with Hong Kong in October 1991.

BACKGROUND

2

On 17 December 1991, the Council noted the contents of memorandum XCCI(91)70, which informed Members of the outcome of the 1991 Article IV consultations which took place in October 1991 and of a change in the consultation arrangements.

3

The IMF Executive Board discussed the findings of the staff mission on 24 January 1992. Annexed to this note is the summing-up of that discussion by the Acting Chairman on behalf of the Board. The following paragraphs summarise the main points therein.

Economic growth and prospects

4

The IMF Board noted that Hong Kong's economy appeared to be well into recovery, with the revival of growth underpinned by a strengthening of confidence.

Inflation

5

While noting the declining inflation rate as a result of the easing of the wage-cost pressures in the first half of 1991, the Board considered that the relief might be short-lived given the tightening of the labour market and the prospect of a continued strong expansion. The Board discussed the role of structural measures in reducing inflation and supported

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Executive Council

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