THE ECONOMY
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The government's consolidated account recorded a surplus of $86.9 billion in 1997–98. After taking into account the net worth of the Land Fund of $203.1 billion, the accumulated surpluses at the end of 1997-98 stood at $457.5 billion. These surpluses form the government's fiscal reserves and are available to meet any calls on its contingent liabilities and enable it to cope with any short-term fluctuations in expenditure relative to revenue.
The two Municipal Councils, which operate through the Urban Services Department and Regional Services Department, are financially autonomous. They draw up their own budgets and expenditure priorities. The expenditures of the two councils are financed mainly from a fixed percentage of the rates from property in their respective areas. Additional income is derived from fees and charges for the services the councils provide.
The Housing Authority, operating through the Housing Department, is also financially autonomous. The government provides the authority with capital and land on concessionary terms to build public housing for rent and for sale. Part of the authority's recurrent expenditure, for clearances and squatter control, is financed from the General Revenue Account.
A trading fund is a department or part of one providing services on a commercial or quasi-commercial basis through the operation of a separate accounting system. Unlike a vote-funded department, trading funds are allowed to retain revenue generated to meet expenditure in providing the services and to finance future expansion.
Government Supplies Department
Purchases of goods and related services required by government departments are undertaken centrally by the Government Supplies Department, which provides similar services to certain non-government organisations, such as the Hospital Authority and the Vocational Training Council. These goods and related services are normally obtained by competitive tendering, without giving preference to any particular source of supply, to ensure that users' needs are met at the best possible price, having regard to life-time cost and reliability of supply. Helping users to derive the best value in their purchases, the department formulates a specific strategy for each type of purchase based on market conditions, focusing on meeting requirements for high-value and critical items by cost-effective and reliable means.
Public tender procedures are widely used for general and common items. Selective tender procedures are only used for low value purchases as a means to save administrative costs. Restricted or single tender procedures are used where open competitive tendering would not be an effective means such as in cases involving compatibility with existing equipment, or patented/proprietary items, or unforeseen urgency. For complex and critical purchases, suppliers may be required to undergo a qualification exercise before tendering to ensure that they are capable in terms of financial and technical standing and reliability in performance.
Tender invitations are published in the Government Gazette and four local newspapers and are mailed to suppliers registered with the department. Consulates and overseas trade commissions are also informed. To allow easy access by overseas suppliers, the department also includes its tender invitations and related information on the Internet. The department is also developing a system enabling suppliers to