Thirdly, current projections show that the reserves are
expected to stand at about $71 billion by the end of 1996-97. This figure is of course no more than a projection which is subject to variation in economic performance and government expenditure. We consider that the present projection provides an adequate cushion to meet adverse circumstances such as lower
economic growth, cost over-runs and the unlikely event of the contingent liabilities materialising.
Fourthly, I wish to reiterate that the proposed financial
arrangements for the Airport Authority and the MTRC represent the most cost-effective way of providing financial support to these two corporations and enabling them to maximise loan funding from the private sector. The alternatives of funding the airport and the airport railway projects are:
(a)
Government funding the two projects in full. This will
incur capital expenditure of $33.7 billion and
$22.2 billion respectively at March 1991 prices, or
$48 billion and $33 billion in nominal dollars.
Naturally, in such circumstances, neither paid-up nor
callable equity will be required. Nevertheless, this
alternative will absorb a net additional $61 billion (in nominal dollars) of public sector resources (ie, total expenditure of $81 billion minus equity injection
of $20 billion).