67.
Taking the General
Revenue Account surplus together
with this increase in fund balances gives an overall surplus for
the year of $4.9 billion.
68.
In the light of the improvements in 1986-87 I now
expect our general reserves
to stand at around $20 billion at
the end of this year plus balances of a further $12 billion
carried in Our various funds. We have a number of contingent
liabilities and these must be allowed for (21). There is no
absolute rule as to the correct level of reserves. It should be
recognized, however, that although our reserves are increasing
again, they remain in real terms slightly
terms slightly below their level at
the start of this decade before we fell into deficit. And the
average annual surplus of $1.5 billion that we have projected
over the forecast period is no more than sufficient to maintain
the real value of our reserves.
69.
The bulk of the
certificates.
Government's accumulated fiscal
reserves is invested by the Treasury with the Exchange Fund
against the
issue by the Fund of interest-bearing debt
The Exchange Fund Ordinance currently limits the
amount which the Fund may borrow from any source at HK$30 billion, but the limit may be altered by resolution of the
Legislative Council with the approval of the Secretary of
State. Given the prudent build up which we forecast for our
fiscal reserves, it will now be necessary to raise this limit (22), and it is my intention to move a resolution in this Council for this purpose.
ESTIMATES 1987-88
70.
Against this background, I now present the draft estimates of expenditure,
revenue estimates and my revenue
proposals for 1987-88.
(21) Listed in Appendix F.
(22) The limit was last successively raised from HK$7 billion to HK$30 billion during 1980 and 1981 to accommodate the build up of fiscal reserves then.
20
/General