THURSDAY, MARCH 29, 1979
SUPPORT FOR GOVT'S DETERMINATION TO FIGHT INFLATION
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THE GOVERNMENT'S DETERMINATION TO FIGHT INFLATION AND TO STRENGTHEN THE HONG KONG DOLLAR FOR THE GOOD OF HONG KONG DESERVES THE FULL SUPPORT OF THE LEGISLATIVE COUNCIL AND THE COMMUNITY, THE HON. CHARLES YEUNG SAID TODAY (THURSDAY) AT THE RESUMED BUDGET DEBATE.
MR. YEUNG, HOWEVER, DOUBTED ONE OF THE TWO MOST IMPORTANT+ PROPOSALS PUT FORWARD BY THE FINANCIAL SECRETARY IN ACHIEVING THIS GOAL THROUGH AMENDING EXCHANGE FUND ORDINANCE.
+ADMITTEDLY THIS IS A STEP IN THE RIGHT DIRECTION BUT I DOUBT WHETHER THIS PROPOSAL WILL BE SUFFICIENT TO ACHIEVE THE DESIRED EFFECT HE SAID.
HIS DOUBT, HE SAID, IS BASED ON THE LOOP-HOLE ACCESS OF SUCH FUNDS TO POTENTIAL BORROWERS THROUGH THE INTERBANK MARKET.+
+ INDEED, FY CHANGING THE STATUS OF GOVERNMENT'S SHORT-TERM DEPOSITS AS SUGGESTED, THE DEPOSITORY BANKS CANNOT USE SUCH FUNDS AS A BASE FOR DIRECT LENDING, MR. YEUNG SAID.
BUT HE STRESSED THAT THERE WAS NO GUARANTEE THAT THE FUNDS +WILL NOT BE MADE AVAILABLE BY THE DEPOSITORY BANKS TO OTHER BANKS WHICH CAN IN TURN LEND TO THE IR NON-BANK CUSTOMERS.+
HE EXPRESSED THE HOPE THAT GOVERNMENT WILL SEE TO IT THAT THIS WOULD NO LONGER BE THE CASE BY INTRODUCING MEASURES TO PLUG THIS LOOP-HOPE.
HE FURTHER POINTED OUT THAT ALTHOUGH THERE IS A 100 PER CENT LIQUIDITY REQUIREMENT FOR DEMAND, CALL AND SEVEN-DAY MONEY OBTAINED FROM THE INTER-BANK MARKET, THIS REQUIREMENT CAN BE CIRCUMVENTED.
THE WINDOW-DRESSING+ SIMPLY INVOLVES THE DEPOSITING OF AN EQUIVALENT SUM BY THE HEAD OFFICE OF A FOREIGN BANK TO ITS LOCAL BRANCH, AND THE RE-DEPOSITING OF THAT SUM BY THE BRANCH TO A FELLOW BRANCH OR ANOTHER BANK OUTSIDE HONG KONG IN A FORM WHICH QUAL IF IES AS A SPECIFIED LIQUID ASSET.
ON GOVERNMENT'S PROPOSAL TO SLOW DOWN THE GROWTH RATE OF DEMAND FROM THE PUBLIC SECTOR, MR. YEUNG SAID: + NOTE THAT GOVERNMENT IS TO TAKE A LEAD PY IDENTIFYING THE PUBLIC WORKS PROGRAMME (INCLUDING THE MASS TRANSIT RAILWAY PROJECT) AS THE MAIN FACTOR CONTRIBUTING TO THE INFLATIONARY PRESSURES AFFECTING THE WHOLE ECONOMY, AND BY ATTEMPTING TO CONSTRAIN THE GROWTH BY REPHASING THE STARTING DATES FOR SOME NEW PROJECTS IN THE PUBLIC WORKS PROGRAMME (OTHER THAN NEW TOWNS AND HOUSING), ACCORDING TO THE AGREED PRIORITY. +
HE SAID HE WAS ALL FOR THE PROPOSAL TO EXERCISE CONSTRAIN ON THIS COMPONENT OF CAPITAL EXPENDITURE BUT NOT ENTIRELY IN AGREEMENT WITH +POSTPONING SOME WORKS AND AM QUITE UNHAPPY ABOUT
I THE PRIORITY RATING IN PRINCIPLE. +
R. YEUNG
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