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deficit financing.
The Government has very large
commitments towards such future projects as the
development of the public assistance scheme, the
expansion of secondary and technical education,
housing for squatters and others, the extension
of Kai Tak Airport, desalination plants and
reservoirs to help meet the growing needs for
water: and possibly a mass transit system (details
at Annex A);
4.
Moreover Hong kong's economy is very largely
dependent on its trade with the outside world.
It is accordingly particularly vulnerable to
outside influences, whether from political scares
or from a closing up of markets; and the indications
are that Hong Kong will find it difficult in
future to maintain the rate of growth it has
achieved in recent years.
5. In view of the buoyant state of the Hong Kong
economy (and the unhealthy state earlier of the
UK balance of payments) it has been difficult
for HMG to help Hong Kong financially with its
development problems. The calls for financial
assistance from HMG are such that they can only
be met on a system of priorities based on need.
However, the Unofficial Members of the Executive
Coulcil have been informed (during the negotiations
over the defence contribution) that it must not
be thought that HMG would not be prepared to
consider assisting Hong Kong in some appropriate
way if an urgent need for such assistance were
to arise at some future time and a specific case
2.
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