TNAG-2815-FCO40-4061-Future-of-Hong-Kong-International-Rights-and-Obligations-(IR-1993 — Page 79

to Parliament,

the

MOU

should

be regarded as involving

obligations in the nature of a contingent liability. The liability relates solely to Hong Kong's undertakings to provide specified services and facilities. There would be no liability

on HMG if, for whatever reason, the location of the annual

meeting had to be shifted from Hong Kong at short notice.

5.

Provided some proposed Chinese amendments which bear on Hong Kong's autonomy can be satisfactorily resolved, Hong Kong remains very keen to host the meeting. Treasury accept that to pull out of the bid at this late stage could send damaging signals which could undermine confidence in Hong Kong. They share our view that there is no reason to believe that Hong Kong will be unable,

in financial or other terms, to deliver the services and

facilities it has promised; so the risk of HMG being asked to meet the guarantee is remote. Accordingly, they are prepared to recommend to the Chancellor that, in the final analysis, HMG

should accept this contingent liability, on the understanding that it would be shared jointly between the Treasury (with responsibility for the IMF) and ODA (with responsibility for the World Bank).

6. David Peretz will be asked to make a further effort to see

if there is any way to avoid this liability; but the chances of doing so are rated as slim. If we do take on the contingent liability, Treasury consider that a joint minute notifying Parliament will probably need to be laid in due course.

M. A laver.

M A Power

International Financial Institutions Department

MP2Nov.min