7
Yet there has been virtually no need to resort to loan
finance which would have burdened the budgetary system
with large debt service charges.
Indeed, the surplus
on recurrent account has been more than sufficient to
finance the deficit on capital account; overall, the
Government has run budget surpluses in all but two years since 1947.
12.
Because the rate of growth of the Hong Kong
economy is so dependent on the rate of growth of its
exports which, in turn, is largely dependent on the state
of the world economy over which Hong Kong has no control, there can be no certainty about annual revenue yields. But the accumulation of budget surpluses over past years
has provided a means of financing deficits should they
occur, and of thereby ensuring that the public services and
spending programmes can remain intact. Without such a
strong budgetary reserve position any temporary shortfall
of revenue over expenditure would involve either the raising
of tax rates (which could delay expansion ahd have a
disincentive effect on growth); or a resort to loan finance (which might prove difficult when demand is slack, but
which would also involve debt servicing and, unless directly self-liquidating projects were involved, would be
imprudent); or a slowing down of public expenditure (which,
from a purely practical and administrative point of view,
could prove difficult to achieve and which, insofar as
the social services were affected, could result in hardship).
/13.....