WEDNESDAY, FEBRUARY 29, 1984
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HE SAID THE NATURE OF THE ISSUE WILL PROBABLY BE IDENTICAL TO THE PREVIOUS ISSUE IN 1975, IN THE FORM OF FIXED RATE HONG KONG DOLLAR DENOMINATED BEARER BONDS WITH A TERM OF FIVE YEARS, WHICH WILL BE SOLD BY TENDER.
+OTHER FORMS OF BORROWING HAVE BEEN CAREFULLY CONSIDERED, BUT THIS SYSTEM, OF WHICH WE HAVE SOME EXPERIENCE, SEEMS WELL SUITED TO OUR NEEDS AT THIS TIME, HE SAID.
SIR JOHN SAID HE WAS ADVISED THAT THE HONG KONG DOLLAR MARKET COULD EASILY ABSORB A BOND ISSUE OF THE SIZE ENVISAGED, PARTICULARLY AS THE BONDS WOULD QUALIFY AS LIQUID ASSETS UNDER THE BANKING AND DEPOSIT-TAKING COMPANIES ORDINANCE.
EARLIER, HE EXPLAINED THAT WHEN HE MENTIONED THE POSSIBILITY OF GOVERNMENT BORROWING LAST YEAR, HE HAD SPECIFICALLY SAID THAT IT WOULD HAVE TO BE ACCOMPANIED BY A CONSIDERABLE EXCESS OF RECURRENT REVENUE OVER RECURRENT EXPENDITURE, AND BE JUSTIFIABLE AS EARMARKED FOR PROFITABLE CAPITAL INVESTMENT.
+WITHOUT TAK ING ACCOUNT OF THE REVENUE PROPOSALS I HAVE JUST OUTLINED, RECURRENT EXPENDITURE NEXT YEAR WOULD REPRESENT 93 PER CENT OF RECURRENT REVENUE, COMPARED WITH 86 PER CENT IN 1983-84 AND A NOTIONAL GUIDELINE OF NO MORE THAN 85 PER CENT.
OF
+TO BORROW AGAINST THIS BACKGROUND COULD BE CONSIDERED TYPICAL THE WORST PRACTICES PREVALENT ELSEWHERE. I WOULD SO REGARD IT. IT IS QUITE IRRESPONSIBLE TO BORROW AS AN ALTERNATIVE TO EXERTING PROPER DISCIPLINE.
+ BUT GIVEN AGREEMENT TO MY REVENUE PROPOSALS AND ACCEPTANCE OF OUR DETERMINATION TO CONTINUE TIGHT CONTROL ON RECURRENT EXPENDITURE, THE RATIO SHOULD COME DOWN FROM 93 PER CENT TO 88 PER CENT.
+ALTHOUGH THIS LATTER FIGURE IS STILL HIGHER THAN I LIKE, TO REDUCE IT FURTHER WOULD INVOLVE EITHER CUTS IN EXPENDITURE OR EVEN HIGHER TAXATION, OR AN ELEMENT OF BOTH.
SIR JOHN SAID HE DID NOT CONSIDER THAT IT WOULD BE APPROPRIATE AT THIS POINT IN TIME SO TO BURDEN THE COMMUNITY AND CONSEQUENTLY, UNDER THE CICUMSTANCES A MODERATE DEGREE OF GOVERNMENT BORROWING APPEARED PRUDENT.
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