Mr. Sidebotham
8
I regret the delay in returning this to you. You spoke with Mr. Bourdillon before he went on leave and the attached redraft of the first portion of the despatch represents the views which, I think, you agreed to consider. I understood also that in the formal despatch, no mention should be made of one of the strongest points against an excessive reserve fund viz that the revenue balance may be so substantially reduced as to appear to support a plea that Hong Kong could not meet its defence contribution. I believe it was agreed that that point could be more appropriately made in a separate personal letter from you.
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Mr. Paskin.
I think that you should see the important proposals in the despatch at (6) on this file for the creation of a Revenue Equalization Fund in Hong Kong on the lines of that in Nigeria.
Mr. Bourdillon and I discussed this very briefly, and I think it is quite right to set out, as is done in paragraph 2 of the draft Confidential despatch (A), the possible diffi- culties which might arise if the fund is on too large a scale, etc.
There is a further difficult point which I agreed with Mr. Bourdillon could better be put to the Governor by s.o. letter, and this has now been done in draft (B).
As the matter is of considerable importance I think
I have therefore you should be aware of what is happening. kept for you to see on your return.
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29. 3. 1952.
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9
do Sis a Grantham - HongKong - Personals Canfor
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m 1952 file
5 APP 1957
APR 1952
See HKP. 407/370|0
1
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age 9
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Page
F
CIRCULAR DESPATCH. (2)
16519/50
COLONIAL
OFFICE
THE CHURCH HOUSE,
GREAT SMITH STREET,
LONDON, S.W.1.
10th January, 1951.
Sir,
10
PRESENTATION OF SURPLUS BALANCES IN
THE ESTIMATES.
I have had under consideration for some time the question whether the budget estimates of Colonial territories generally could be made more informative in certain respects, particularly as to the exhibition of surplus balances.
2. Although it is usually possible to extract, from the estimates of any particular year, items indicating to what extent surplus balances are in fact hypothecated, a complete picture is not always given, because certain expenditure, e.g. on bulk purchasing, is not subject to the estimates. In fact, it can happen that an otherwise flourishing financial position can reach a state of crisis for no other reason than that surplus balances are, in fact, immobilised in advances in anticipation of raising a loan, or in trading ventures of quasi- commercial nature, or in other ways.
3. Of recent years, the likelihood of such a situation arising has greatly increased. Public funds are necessarily tied up, for instance, in financing bulk purchases to an extent unprecedented in peace time. At the same time the implementation of development plans frequently entails the raising of borrowed capital, and if there is delay in raising this money, as may happen under present circumstances, it is possible that considerable expenditure may have to be financed from surplus funds in advance of the actual raising of the loan. Moreover, as you will have gathered from other despatches, there are nowadays elements of uncertainty in the procedure of the raising of loans, and this makes it more than ever desirable to ensure that the period between the commencement of loan works and the actual raising of a loan should be as short as possible so that the surplus balances will not be immobilised for any lengthy period.
THE OFFICER ADMINISTERING
14.
THE GOVERNMENT OF
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