5-
years.
Hong Kong is still feeling the effects
of the serious trade depression of the last few
Estimates for 1936 showed a deficit, even
after considerable reduction of expenditure and the
outlook for 1937 is still critical. Expenditure
cannot be cut much further and the difficulties of
the budget have been greatly increased by the fall in
the dollar exchange rate, leading to a heavy increase
in the expenditure on the Government's sterling
commitments, especially in the form of salaries.
Nevertheless, it is hoped that currency stabilization
and the improved political outlook in China may lead
to some measure of recovery.
2. The Governor describes the budget as
"admittedly a makeshift one'; in view of exchange
difficulties. Both revenue and expenditure are
expected to rise, the latter mainly through the fall
in the dollar rate. It is felt that expenditure
cannot be further reduced, in the circumstances, or
staff retrenched immediately without serious
dislocation.
The reduction in the maintenance
vote imposed in 1936 cannot be safely repeated, as
continued neglect of essential services would be
definitely uneconomical. 1937 will, however, be in
some ways a turning point. Hong Kong is nearing the
end of a period of expansion and early next year
three of the major public works will be finished.
The possibility of reducing the scale of salaries for
new appointments and substituting local for European
staff is under constant attention.
the dollar sate
may
well have
A
Further the fall
stumulating effect & trade
my
• mureve revenue above the Estimates, as it did substantially in
The
1936