SAVINGRAM
To the Secretary of State for the Colonies.
From the Governor, Hong Kong.
Date
No.
58
- 3-
5. In my despatch No.57 of 1st June, 1950, I outlined the factors making it difficult to estimate revenue and leading to the probability that wide fluctuations might occur. The outbreak of war in Korea is too recent an occurrence for a definite trend to be apparent, but although the figures for the first quarter are good it seems only too probable that the serious international situation will have an adverse effect on the Colony's revenue. Even before the recent deterioration of the situation, revenue collections tended to vary a good deal from one week to another, and during the period under review, weekly receipts failed on four occasions to reach the average figure required to realise the total provided in the estimates. On two further occasions the weekly receipts only just reached the average required. So far, however, these bad weeks have been more than compensated for by good weeks, but this may not continue for very much longer.
6. The particulars given in paragraph 4 indicate that expenditure for the first quarter took the course normal in the first quarter of the year, of being well below a quarter of the sums included in the estimates. Indeed expenditure under the Head Public Works Non-Recurrent was less than 10% of the amount voted, and the total expenditure figure included considerable supplementary expenditure including provision for the wiring of the frontier which is estimated to cost $1 million when completed. With the possibility to face that there may be a further deterioration in the international situation, necessitating further substantial expenditure on defence and security measures
some indeed are already under consideration) it has been deemed imprudent to continue expenditure on the scale provided in the estimates and Heads of Departments are being instructed to attempt to reduce expenditure on Other Charges by at least 10% and to make whatever economies can be effected by the deferment of items of special expenditure or the filling of vacancies.
7. Expenditure charged against the Rehabilitation Loan up to 30th June, 1950, amounted to $112,296,300 of which $62,296,300 was met from surplus balances pending the raising of further loan funds. As you are aware, arrangements are to be made whereby certain sub-items are to be removed from the Loan Schedule with a view to charging to Expenditure in diminution of the General Revenue Balance, approximately $50 million. A separate despatch will be sent to you shortly on this question.
CGFFM/▼
M