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Audit of Public Accounts
THE ECONOMY
The audit of all the government's accounts is carried out by the Director of Audit. He also audits the accounts of the Urban Council, the Housing Authority and more than 50 statutory and non-statutory funds and other public bodies, as well as reviewing the financial aspect of the operations of the multifarious government-subvented organisations in Hong Kong. The director's appointment, tenure of office, duties and powers are set out in the Audit Ordinance, which also provides that he shall not be subject to the direction or control of any other person or authority.
The Director of Audit's report on the annual accounts of the government is submitted to the Governor as President of the Legislative Council for tabling. It is then referred to the Public Accounts Committee, comprising a chairman and six members, all of whom are unofficial members of the Legislative Council. In the exercise of its authority, the committee may call any public officer or other person concerned to give information and explanations and to produce any documents and records which it may require. Up to 1983, the committee held all its meetings in camera but this was changed in 1984 and hearings are now held in public except where the committee is of the opinion that the public interest requires confidentiality. The report by the Public Accounts Committee on the Director of Audit's report relating to the accounts of the government is also tabled in the Legislative Council. Both are copied to the Secretary of State.
The Economy in 1985
Despite the substantial slowing down in economic growth and the sluggish performance of domestic exports, some areas of the economy continued to show favourable developments in 1985, Re-exports recorded substantial growth; the unemployment rate remained at a relatively low level; earnings continued to improve both in money terms and in real terms; and the rate of inflation was low. Moreover, the property market, which had been overshadowed in the past two years by the problem of oversupply and the anxiety over the future of Hong Kong, staged a strong recovery in 1985. This was attributable to a combination of factors, including the return of confidence in the future of Hong Kong, the continued improvement in real incomes, the fall in property prices and rentals over the past few years to more realistic levels, and the several reductions in mortgage rates during the year. Nevertheless, there were some areas of concern, including the growing threat of protectionism in Hong Kong's export markets, particularly the United States, and China's tighter controls on the use of its foreign exchange reserves, both of which could have serious. implications for the performance of the Hong Kong economy.
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The preliminary estimates show that the growth rate in real terms of the gross domestic product (GDP) in 1985 was only 0.8 per cent, considerably lower than the provisional estimate of 9.3 per cent for 1984. As domestic exports declined by five per cent in real terms while domestic demand showed limited growth, the fall in domestic exports was the major factor contributing to the weak economic performance in 1985. This was in sharp contrast to the situation in 1983 and 1984 when domestic exports provided the main impetus to the growth of the GDP.
In 1985, domestic exports fell by six per cent in money terms or about five per cent in real terms. This represented a sharp deceleration from the real growth rates of 14 per cent in 1983 and of 17 per cent in 1984. The poor performance in 1985 was largely due to the slowing down in the growth rates of the economies of many of Hong Kong's export markets, particularly the United States. The relative strength of the Hong Kong dollar against the currencies of most of the territory's major competitors in 1984 and in early 1985 also