FINANCIAL STRUCTURE
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other than a comparatively small amount financed by borrowing. These annual capital spendings have been as high as $735 million; in 1968-9 they totalled nearly $377 million.
The principal reason for these results, which appear so favourable, was that during the earlier years exceptionally rapid increases in population generated internal economic activity which raised the yield from taxation and other sources of revenue without appreci- able increases in the rates of tax. Revenue expanded from $292 million in 1950–1 to $2,081 million in 1968–9. The rate of increase was affected by variations in such factors as the economic situation and inflows of capital, but the upward trend has been continuous. In expenditure there was inevitably a time-lag before Government could develop the public and social services necessary for an in- creasing population. However, as these services were developed at a gradually accelerated rate, the margin between recurrent expenditure and recurrent revenue tended to narrow. For example, in 1952-3 recurrent expenditure absorbed only 50 per cent of the recurrent revenue, but by 1959–60 the figure had risen to 82 per cent. Consequently, in that year the surplus of revenue over ex- penditure could no longer finance all the capital expenditure and an overall deficit of $45 million occurred. Subsequent budgets until the current year anticipated further and in some cases sub- stantial deficits, but the actual results suggest that the economic strength and resilience of the Colony was underestimated, partic- ularly earlier on, for 1965-6 is the only year in which another deficit has been recorded.
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While the export trade remained buoyant, towards the end of 1964-5 the property market turned dull and this, to a degree, affected other sectors. The deficit of 1965-6 reflected this temporary set back. 1966-7 saw a swing back into surplus which has persisted despite the continuation of the upward trend in the recurrent expenditure/revenue ratio which increased to 75 per cent in 1968–9 and is estimated at 80 per cent for the current financial year. The swing was assisted by a small increase in taxation but a more important factor was a falling-off in capital works expenditure as certain major projects, particularly the Plover Cove Reservoir scheme and certain major land development schemes, gradually reached completion and have not yet been replaced by new projects