TNAG-2815-FCO40-4061-Future-of-Hong-Kong-International-Rights-and-Obligations-(IR-1993 — Page 126

21 October 1993

Foreign & Commonwealth

Office

67

James H Lau Esq

Hong Kong Monetary Authority

London SWIA 2AH

Telephone: 071-

HKC 031 /10

1.BEL 1993

Rear Sames, вос

1997 WORLD BANK/IMF ANNUAL MEETINGS

1. As I mentioned to you over the telephone the Treasury's solicitors have come to the conclusion that the MOU to be signed by the UK will create a contingent liability for HMG. Treasury Ministers will have to be consulted on whether this contingent liability can be accepted and, if they agree, a minute will need to be laid before Parliament. Mr Cunliffe is prepared to recommend this to Treasury Ministers, but he is concerned that the minute may give the impression that the UK has to stand behind Hong Kong financially, and that this may give rise to questions in the House.

2. I mentioned to him your point about using the contingent liability ceiling for Hong Kong's ADB subscription to cover the Annual Meetings. He will check whether this is possible, but his initial reaction was that Parliament had to be informed if any new contingent liability different in nature from existing contingent liabilities.

3. I explained your concern about seeking approval from Finance Committee to put aside in a separate account money for pre 30 June 1997 expenditure on the Meetings, and providing a guarantee that these funds would be passed to HMG in the event of a default by HKG. Mr Cunliffe agreed that if Finance Committee had to be consulted we could face the same (or worse) problems as laying a minute before Parliament. He would however be grateful if you would consider whether this is a feasible option and let us have your views as soon as possible.

4.

The rough estimates I have heard for the expenditure likely to be incurred before 30 June 1997 on the Annual Meetings varies enormously: from HK$1 million to £1 million.

I appreciate that it is not possible to provide an accurate figure at this stage, but I wonder whether you could make an educated guess which will at least provide Treasury officials with a figure to quote in submitting to Ministers.

jam.let.ADM

SLM