NFIDENT A
21
To. Hong Kon
Savin No. 948
18 SEP 1500
سها
23
Deap 120 Comf
14.11.50
$59 million is the figure for
31.3.50
Mr. Palmer. Mr. Hall.
1. In (5) opposite we pressed the Governor to set off against revenue surpluses such part of the Rehabilitation Loan expenditure over and above the 50 million already raised by public subscription as would leave a general revenue balance amounting to about 6 months' normal revenue in reserve.
2. In (20) opposite in approving this year's Estimates and incidentally commenting at the same time on the revenue and expenditure figures for the first quarter of the financial year 1950/51, we suggested that on all indications it might be possible to set off all the Rehabilitation Loan expenditure in excess of $50 million and still leave a sufficient general revenue balance in hand.
3.
Discussions of this sort are, however, really some- what academic and pointless now that it has been decided that no more of the original $150 million Rehabilitation Loan can be raised by public subscription. What is really relevant is the Colony's real reserves of hard cash represented by the difference between the present figure for general revenue balances and the amount of over-expenditures under the Rehabilitation Loan and it seems clearly sensible, now that further public loan is out of the question, that the figure quoted for the Colony's revenue surpluses should as soon as convenient represent these actual cash reserves. This involves setting off against surpluses/rehabilitation expenditure over $50 million and thus reducing the fictitiously high figure at present quoted for the total of revenue surpluses.
4. To do this, however, as the Governor points out in the despatch just received at (21) opposite, involves bringing Rehabilitation Loan expenditure over $50 million to account as normal expenditure and if this is done in toto in the present financial year it may cause a paper deficit on the year's working. The amount of the Rehabilitation Loan expenditure to be set off is about $59 million, In addition to this the $16 million contribution to H.M.G. towards the cost of the garrison (which was not provided for in the estimates) has to be borne in mind and (21) opposite estimates that in all about $78 million of expenditure which was not visualised in the estimates may have to be met. If this were all met this year a deficit of about $75 million would result, assuming the revenue and expenditure estimates to be accurate.
In fact, however, it seems clear from the revenue and expenditure figures for the first quarter and from more recent figures relating to Hong Kong's staggering month by month increase in trade that a substantial surplus over and above that visualised in the estimates will be shown. This surplus would serve to reduce the $75 million deficit.
5. The Governor estimates the possible surplus at $60 million which would leave a paper deficit of $15 million
/on