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MONDAY, SEPTEMBER 23, 1985
TURNING TO BANKING, SIR JOHN SAID THAT THE FAILURE OF TWO BANKS HAD PROPERLY RAISED QUESTIONS ABOUT THE ADEQUACY OF THE SYSTEM OF PRUDENTIAL SUPERVISION.
AFTER LENGTHY AND CAREFUL CONSULTATION WITH THE FINANCIAL COMMUNITY, VARIOUS AREAS FOR IMPROVEMENTS HAD BEEN IDENTIFIED. RECENT EVENTS HAD SHOWN THAT THE LIQUIDITY AND MINIMUM CAPITAL REQUIREMENTS IN THE BANKING AND DEPOSIT-TAKING COMPANIES ORDINANCES HAD TO BE TIGHTENED UP, AND CONSEQUENTLY NEW APPROACHES TO LIQUIDITY, CAPITAL ADEQUACY AND OTHER ITEMS OF CONCERN HAD BEEN DEVELOPED.
AREAS FOR IMPROVEMENT ALSO INCLUDED NEW STATISTICAL RETURNS TO ENABLE A CLOSER MONITORING OF FINANCIAL INSTITUTIONS BY THE COMMISSIONER OF BANKING AND DEPOSIT-TAKING COMPANIES, THE WIDER USE OF THE COMMISSIONER'S DISCRETIONARY POWERS ALREADY PROVIDED FOR IN THE TWO ORDINANCES GENERALLY TO ENSURE SOUND BUSINESS PRACTICE AMONG FINANCIAL INSTITUTIONS AND AN ENHANCED BASIS FOR INVOLVING AUDITORS WITH SUPERVISORS.
REFERRING TO +SOME MORE FAVOURABLE LAND SALES, SIR JOHN SAID THAT COUPLED WITH CONTINUING TIGHT CONTROLS OVER PUBLIC SECTOR EXPENDITURE AND GOOD YIELDS FROM TAXES AND DUTIES, THERE WERE INDICATIONS OF A PROBABLE IMPROVEMENT IN THE GOVERNMENT'S ACCOUNTS COMPARED WITH THE BUDGETED DEFICIT OF $1 BILLION FOR 1985-86.
+NEXT FINANCIAL YEAR, GIVEN NO EXTERNAL SHOCKS, WE CAN STILL EXPECT BALANCE, HE SAID.
WITH REGARD TO PUBLIC SECTOR SPENDING, SIR JOHN SAID THAT THE RELATIVE SIZE OF THE PUBLIC SECTOR HAD BEEN REDUCED FROM 19.1 PER CENT OF GDP IN 1982-83 TO 18.6 PER CENT IN 1983-84, AND TO 16.1 PER CENT IN 1984-85.
+ THE LATEST ESTIMATE OF EXPENDITURE ON THE CONSOLIDATED ACCOUNT FOR 1985-86, BASED ON PERFORMANCE OVER THE FIRST FIVE MONTHS, WAS $43.9 BILLION, A DECREASE OF $1.7 BILLION ON THE BUDGET ESTIMATE.
THIS WAS ATTRIBUTABLE MAINLY TO LOWER-THAN-EXPECTED CAPITAL EXPENDITURE DUE IN PART TO THE COMPLETION OF A NUMBER OF MAJOR PROJECTS, HE SAID.
REFERRING TO EXPORTS, SIR JOHN REVISED HIS FORECAST GROWTH RATE IN REAL TERMS OF TOTAL EXPORTS FOR THE YEAR TO 11 PER CENT COMPARED WITH HIS BUDGET FORECAST OF 18 PER CENT.
+BY WORLD STANDARDS THIS IS STILL PRETTY GOOD, HE SAID.
/SIR JOHN