6
Members understand that we have been fully responsible for our own annual Budgets for many years. The United Kingdom Government has played no role in this. Senior Chinese officials have assured us that, on the establishment of the SAR Government on 1 July 1997, the preparation of Hong Kong's annual Budgets will immediately fall within the scope of the SAR Government's financial autonomy. The JLG or the Central People's Government have no role to play in their preparation. Indeed, the Basic Law guarantees this autonomy. But in the unique case of the 1997- 98 Budget which straddles I July 1997, clearly we need to co-operate with the Chinese side in order to achieve a full 12-month Budget which will cover the normal budgetary cycle from 1 April 1997 to 31 March 1998. The continuity of the entire range of public services through the transition will depend on this. And only with such a 12-month Budget will we have certainty over Hong Kong's fiscal system and policies before and after the handover,
We shall soon embark on the preparation of the 1997-98 Budget in full co- operation with the Chinese side. The Chinese side have agreed with us that this budget should cover the normal 12-month period with effect from 1 April 1997. Both sides have the same objective of producing a Budget which will be conducive to a smooth transition and Hong Kong's long-term prosperity. There is already a great deal of common ground on the basis and mechanisms for our co-operation. For example -
*
the detailed compilation of the 1997-98 Budget will remain the responsibility of the relevant Hong Kong Government departments:
the prudent financial principles and the system of financial management which the Hong Kong Government has followed in the past have proved effective and are consistent with the spirit of Articles 107 and 108 of the Basic Law. They should continue to be the guiding principles for preparing the 1997-98 Budget;
the two sides will strengthen co-operation in order to ensure that the preparation of the 1997-98 Budget will proceed in an orderly manner. We view the two sides of the JLG expert group as equal partners in this joint endeavour;
so far as possible we will aim to keep to the budget timetable by reaching an early consensus on each major issue as it arises;
given the tight time-frame, the expert group will meet frequently, normally once a month (but more often if necessary); and
the JLG confidentiality rule will continue to apply strictly to protect the market-sensitive budget deliberations.