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The UNHCR says it has told the government that the outstanding amount is unlikely to be repaid

The United Nations' refugee agency has asked the Hong Kong government to write off $1.16 billion it is said to owe for the upkeep of Vietnamese boat people who arrived from the late 1970s to the 1990s.

The then-colonial government controversially paid the amount in advances to feed and house about 220,000 Vietnamese asylum seekers on behalf of the United Nations High Commissioner for Refugees.

The UN body has previously said it cannot repay the money but this is the first time that it has urged the government to write off the sum.

Audit reports throughout the 1990s urged the Hong Kong administration to retrieve the money but the UNHCR, already severely under-funded, has not made any payments since 1998, when it repaid $3.9 million.

The issue has resurfaced following the economic downturn and Hong Kong's burgeoning budget deficit, which is expected to hit a total of $67.9 billion this financial year.

A UNHCR senior spokesman told the South China Morning Post it was time the government wrote off the sum as it was unlikely to be repaid. 'We don't think the UNHCR could afford to pay the government such a big sum and have been communicating this to the administration,' he said.

'The UNHCR budget comes from donations from countries. We have tried to raise funds, but given the wealth of Hong Kong, no country is willing to donate funds just to return the money to Hong Kong.

'The debt is still pending. The Hong Kong government should write it off because I don't think the UNHCR could repay it.'

The spokesman said the issue was raised around budget time this year, when the government asked the agency to declare its position.

But with so many international crises, including the Afghanistan and Iraq wars, the agency had had to divert already limited resources to those areas, he said.

The local office of the UNHCR was so strapped for cash it could not afford to pay the basic living expenses that declared refugees in the city were entitled to.

The Security Bureau, which handles the issue, declined to comment but said it would urge the UN body regularly to settle the amount.

Hong Kong has spent $8.71 billion on the Vietnamese refugee and migrant programme since 1979, in addition to the $1.16 billion.

'The UNHCR has been repeatedly asked to reimburse the outstanding advances made for the care and maintenance of Vietnamese migrants,' a spokeswoman said.

The government has acknowledged that the Statement of Understanding signed with the agency is not legally binding.

The outstanding amount is the principle, with no interest rate conditions imposed on it in the statement.

PricewaterhouseCoopers tax partner Tim Lui Tim-leung said: 'If the debt is clearly irrecoverable, perhaps it is time to think about the fact that we're never going to collect it and the most prudent thing to do is to write it off completely or make a provision for a percentage of it.'

Mr Lui said the mere fact that the debtor was asking for a write-off was a clear indication the chance of recovery was remote.

Financial Services Bureau records show Hong Kong's only other foreign debt involves the Bank of Thailand.

The government joined an International Monetary Fund effort in 1997 to bail out Thailand.

The bank has already repaid a large portion of the US$862 million.

At the end of last year, the bank still owed US$136 million and US$1 million interest.



HK is urged to write off $1.16b refugee debt