THE ECONOMY
resources from the private sector. In concrete terms, the Government undertakes to contain the growth rate of public expenditure within the trend growth rate of the economy over the medium term. In addition, it strives to spend within its means, thereby keeping the budget in balance and leaving the substantial fiscal reserves to cater for grave adversities. Prudent fiscal practice is amongst the crucial elements that instil confidence of international investors in the Hong Kong economy.
Structure of Government Accounts
The Government controls its finances through a series of fund accounts. The General Revenue Account is the main account for day-to-day departmental expenditure and revenue collection. Eight other funds exist mainly to hold investments or to finance capital expenditure and government loans. They are the Capital Works Reserve Fund, Capital Investment Fund, Civil Service Pension Reserve Fund, Disaster Relief Fund, Innovation and Technology Fund, Land Fund, Loan Fund and Lotteries Fund.
The Capital Works Reserve Fund finances the public works programme, land acquisitions, capital subventions, major systems and equipment items, computerisation and the payment of redemption money in respect of land exchange entitlements. Its income is derived mainly from land premia.
The Capital Investment Fund finances the Government's capital investments, such as equity injections in the Airport Authority, the Kowloon-Canton Railway Corporation and the MTR Corporation Limited, and capital investments in the Hong Kong Housing Authority. Its income is derived mainly from appropriation from the General Revenue Account and dividends.
The Civil Service Pension Reserve Fund acts as a reserve to meet payment of civil service pensions in the unlikely event that the Government cannot meet such liabilities from the General Revenue Account. Its income is derived from investment earnings.
The Disaster Relief Fund finances grants for humanitarian aid in relief of disasters that occur outside Hong Kong. Its income is derived mainly from appropriation from the General Revenue Account and investment earnings.
The Innovation and Technology Fund finances projects that contribute to innovation and technology upgrading in the manufacturing and service industries, as well as those that contribute to the upgrading and development of the manufacturing and service industries. Its income is derived mainly from investment earnings.
The Land Fund was established on July 1, 1997 to enable the investments held by the former Trustees of the HKSAR Government Land Fund to be formally brought into the Government's account. Its income is derived from investment earnings.
The Loan Fund finances loan schemes such as housing loans and student loans. Its income is derived mainly from appropriation from the General Revenue Account, loan repayments, and interest on loans.
The Lotteries Fund finances welfare services through grants and loans. Its income is derived mainly from the sharing of the proceeds of the popular Mark Six lotteries.
65