SECRET
22. THE TOTAL COST TO THE REVENUE OF THESE PROPOSALS WILL BE, SAY, DOLLARS 127 MILLION IN 1977-78. THIS REDUCES THE SURPLUS SHOWN IN
THE TABLE IN PARAGRAPH 13 TO DOLLARS 45 MILLION.
23, TOTAL PUBLIC SECTOR EXPENDITURE (INCLUDING URBAN
COUNCIL, HOUSING AUTHORITY, DEVELOPMENT LOAN FUND, AS WELL AS THE GENERAL ACCOUNT IN THE CURRENT YEAR WILL PROBABLY BE ABOUT 17% OF THE EG.D.P. INSTEAD OF THE 20% FORECAST, BECAUSE OF THE SURPRISING STRENGTH OF THE UP-SWING OF THE ECONOMY. NEXT YEAR AT DOLLARS 9,445 MILLION IT WILL BE ABOUT 17.6% OF FORECAST G.D.P., THOUGH IT INCLUDES A RECORD ABSOLUTE INCREASE OF DOLLARS 1,450 MILLION OVER
THE PREVIOUS YEAR.
24. THE ABOVE FIGURES DIFFER SLIGHTLY FROM THOSE I MENTIONED IN
DECEMBER AS I TOLD YOU THEY MIGHT. THE DIFFERENCES ARE DUE TO
ARITHMETIC VARIATIONS IN ESTIMATES OF REVENUE AND EXPENDITURE,
AND NOT TO CHANGES IN THE GOODS AND SERVICES REQUIRED BY THE
PROGRAMMES WE ARE COMMITTED TO FINANCE. MY MAIN CONCERN IS AS TO
WHETHER WE WILL ACTUALLY BE ABLE TO SPEND THE FUNDS
PROVIDED PARTICULARLY ON CAPITAL WORKS.
WE ARE OF COURSE DOING EVERYTHING POSSIBLE TO ENSURE THAT WE DO. IF, CONTRARY TO EXPECTATIONS THERE IS A FLUSH OF EXPENDITURE ON APPROVED ITEMS WE PROPOSE TO COVER IT BY CALLING ON THE RESERVES
RATHER THAN HOLD BACK TO KEEP WITHIN THE BUDGETARY LIMITS SET OUT
ABOVE.
MACLEHOSE
FILES
HD/HONG KONG DEPT
PS/LORD GORONWY ROBERTS
MR CORTAZZI
MR MURRAY
9
SECRET