COLONIAL SECRETARIAT FILE
No. SCR 1/4841/55 Pt. II
No: 470
CONFIDENTIAL
(5
GOVERNMENT HOUSE,
HONG KONG.
23 April, 1970
Don
on HKK, 13/23.
Sir,
In my despatch No. 617 of 24th May 1969, I
reported steady progress in the social and economic fields and concluded that despite Hong Kong's vulnerability to external pressures its future looked reasonably bright. In this despatch I am able to report continuing progress in these areas and a growing public and overseas confidence in the Colony's future.
2.
The rapid increase in economic activity in 1968/69 and a continuing unusual rate of growth in 1969/70 have had their naturally beneficial effects on our fiscal situation. In spite of an estimated 13% increase of $245 million (£16 million) in expenditure and a reduction of $14 million (£0.93 million) in taxes, the 1969/70 Budget forecast a surplus of $53 million (£3.5 million). The revised estimate now suggests a revised surplus of $348 million (about £23 million) for which a shortfall of expenditure accounts for only $30 million or £2 million but the actual surplus may be in the region of $450 million (£30 million).
-
greater part of this surplus will be due to increased revenue, which seems likely to reach a figure about 19% higher than in 1968/69.
3.
It is not easy to generate public expenditure, which is based on steady expansion towards planned goals, fast enough to keep pace with an economic explosion such as Hong Kong has enjoyed in the last two years. The 1970/71 Budget estimates expenditure at $305 million (£20 million) over the revised figure for 1969/70, an increase of nearly 15%; but it seems clear that revenue from present taxes, even after certain marginal reductions which are proposed, will produce a further substantial surplus, estimated at about $187 million (£12 million).
14
The Right Honourable Michael Stewart, C.H., M.P., Secretary of State for Foreign and
Commonwealth Affairs.
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CONFIDENTIAL
HKK12/66