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22.
have unnecessarily restricted the implementation of other policies eg in education and health, which are essential for the healthy and balanced growth of an industrial society;
(b) there has up to last year been no attempt
to resort to deficit financing. This has its origins in the requirement in the 1950's and 1960's to obtain UK approval not readily granted for borrowing. This has led to capital profits being paid for as out of the current budget and as much as 30% of the Government's capital expenditure is at present financed by the surplus on current
account;
(c) there has been little or no attempt to use
other tools of monetary management (eg. control of the money supply) which have become important since the flotation of sterling in 1972. This has been in part attributed to unwillingness to develop appropriate institutions eg a central bank;
(a) there has been too great attachment to free
port status which has imposed unnecessary limitations on the revenue obtainable from
indirect taxation.
Defenders of the existing philosophy cogently argue that the Hong Kong situation is unique in that there are no natural resources to fuel growth; that exports account for a very large share of Hong Kong's total national product and that any inflation created by Government expenditure is, de facto, exported thus eroding Hong Kong's competitive position; and that political uncertainties over the future dictate the encouragement of quick returns for overseas investors and militate against such monetary devices as deficit financing. All this is difficult to deny but it is
/equally
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