Hong Kong Monetary Authority to participate in the New Arrangements to Borrow

The Executive Board of the International Monetary Fund (IMF) has adopted a decision on the New Arrangements to Borrow (NAB) at a meeting on Monday (27 January). Hong Kong Monetary Authority (HKMA) will be one of the 25 participants in the NAB.

The IMF decision was taken following an agreement by potential participants in the NAB on the terms and conditions under which they will be prepared to make loans to the IMF when additional resources are needed to cope with exceptional situations which may impair or pose a threat to the stability of the international monetary system. The NAB thus should provide the IMF with additional resources to cope with crisis situations and minimise the negative impact that may affect other regions.

The HKMA will be participating with a share of the NAB credit line at SDR 340 million* (around US$476 million). A table showing the 25 participants and their share in the NAB credit line is attached.

"Hong Kong's participation in the NAB is of considerable significance to the territory," said Mr Donald Tsang, Financial Secretary.

"Last year, Hong Kong joined the Bank for International Settlements and we are now taking part in the NAB. It is clear from these developments that Hong Kong is well recognised by the international financial community as a leading international financial centre," added Mr Tsang.

According to Mr Joseph Yam, HKMA's Chief Executive, Hong Kong's lending under the NAB is to the IMF which has triple A credit rating. The loan will be drawn from the Exchange Fund and have a maturity of five years and will earn market interest rate.

"Lending to the IMF, an institution of high credit rating, represents a prudent investment and is compatible with the established investment strategy of the Exchange Fund," said Mr Yam.

Hong Kong Monetary Authority
28 January 1997

New Arrangements to Borrow Participants and Amount of Credit Arrangements

* SDR is an international reserve asset created by the IMF to supplement existing reserves. Its value is calculated based on a basket of five major currencies. The exchange rate as at the close of 27 January 1997 was US$1.40 to one unit of SDR.