WEDNESDAY, OCTOBER 8, 1986
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FIRM CONTROL ON PUBLIC EXPENDITURE
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THE GOVERNMENT INTENDS TO KEEP PUBLIC EXPENDITURE FIRMLY UNDER CONTROL AT A GROWTH RATE OF 3 PER CENT TO 4 PER CENT IN REAL TERMS IN 1986-87, THE GOVERNOR, SIR EDWARD YOUDE, SAID IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).
SIR EDWARD SAID THE END OF THE 1985-86 FINANCIAL YEAR SAW A WELCOME RETURN TO BUDGET SURPLUS AFTER THREE YEARS OF DEFICITS ON GENERAL REVENUE ACCOUNT.
THE HIGHER YIELDS FROM EARNINGS AND PROFITS TAX WERE BEING MAINTAINED AND, IF PRESENT TRENDS CONTINUED, THE SURPLUS IN 1986-87 MIGHT BE GREATER THAN ORIGINALLY ESTIMATED.
NEVERTHELESS IT WAS INTENDED TO KEEP PUBLIC SPENDING FIRMLY UNDER CONTROL.
HE EXPLAINED THAT STRICT CONTROL IN THIS AREA HAD ENABLED HONG KONG TO AVOID MANY OF THE DIFFICULTIES WHICH HAD BEDEVILLED OTHER ECONOMIES.
CONTROL OF THE GROWTH OF EXPENDITURE SHOULD RESULT IN THE SIZE OF THE PUBLIC SECTOR BEING KEPT AT ABOUT 16 PER CENT OF GROSS DOMESTIC PRODUCT IN 1986-87.
SIR EDWARD POINTED OUT THAT THE MEDIUM RANGE FORECAST, REFERRED TO IN THE FINANCIAL SECRETARY'S BUDGET SPEECH THIS YEAR, ALSO GAVE GROUNDS FOR CAUTIOUS OPTIMISM ON THE HEALTH OF PUBLIC FINANCES OVER THE MEDIUM-TERM, 1987-88 TO 1990-91, FORECAST PERIOD.
+THERE WILL BE SOME ROOM FOR EXPANSION AND IMPROVEMENT OF SERVICES. THIS WILL NEED CAREFUL MANAGEMENT, HE SAID.
THE GOVERNOR SAID THAT INEVITABLY NOT ALL THE SERVICES FINANCED BY THE GOVERNMENT COULD BE DEVELOPED AT THE RATE THAT SOME MIGHT WISH. THERE WOULD BE DIFFICULT CHOICES TO BE MADE, AND HONEST DIFFERENCES OF VIEW ON WHICH NEEDS WERE MOST IMPORTANT.
+TO ASSIST THE DETERMINATION OF PRIORITIES AN IMPROVED METHOD OF LONGER-TERM FINANCIAL PLANNING IS BEING DEVELOPED WHICH WILL ENABLE A CLEARER VIEW TO BE TAKEN OF RELATIVE PRIORITIES THAN HITHERTO, HE SAID,
+ IT SHOULD BE POSSIBLE TO INTRODUCE ELEMENTS OF THE NEW SYSTEM IN TIME FOR THE COMING BUDGET EXERCISE.+
EXPENDITURE ON CAPITAL WORKS HAD BEEN SLOWER THAN ORIGINALLY FORECAST, SIR EDWARD SAID.
HOWEVER, THE EFFECT OF THE INCREASE. TO $4.8 BILLION, IN THE LEVEL OF COMMITMENT FOR NEW WORKS TO START IN THE FINANCIAL YEAR 1986-87 SHOULD SOON BECOME APPARENT, AND IT WAS EXPECTED THAT EXPENDITURE WOULD BEGIN TO PICK UP IN THE SECOND HALF OF THE YEAR.
THE LEVEL OF COMMITMENT FOR NEW WORKS TO START IN 1987-88 WOULD BE THE HIGHEST EVER, AT SOME $6 BILLION.
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