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ifl.rb/July 93/27.7
incentive, immediately
and economic autonomy.
CONFIDENTIAL
after the handover, to maintain stability Despite worsening Anglo-Chinese relations
over Hong Kong the Chinese have
proposal.
5.
consistently supported
the
Agreement has been reached with the Chinese on the role which the Hong Kong authorities would play at the Annual Meeting. Fund and Bank staff have examined and approved the facilities available in Hong Kong. The Hong Kong Executive Council has formally
of provision approved the proposals and agreed financial
up
to
HK $200 million (about £17 million). The next step is for the Chinese Governor of the Fund and Bank to write a formal letter of invitation to the institutions. This would be supported by a letter from you, as UK Governor and a separate letter from the Hong Kong authorities. A proposal would then be put to the institutions' Board of Directors after the September Annual Meetings. Our current assessment is that there will be sufficient support for Hong Kong's application: crucially the US has promised its support.
Possible problems
6.
Ja
The institutions have suggested they might want an assurance from the UK as the IMF/IBRD member that we stand behind the financial commitments of the Hong Kong authorities in respect of expenditure on the Annual Meetings which will occur
1997.
before
June
It has been suggested the Chinese give a similar assurance will fall in respect of (the main bulk of the) expenditure which after June 1997. This could be an obstacle for two reasons:
(i) it would not be consistent with the very high level of autonomy which Hong Kong enjoys, and will continue to enjoy after 1997, in the conduct of its financial and economic
affairs. Indeed Hong Kong's autonomy could be damaged if either the UK or the PRC were required to stand behind Hong
Kong.
:
i
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