4
In its Concluding Statement, the IMF noted that, compared to last year, there is a significant reduction of uncertainties over the transition in 1997 and widely held confidence concerning Hong Kong's prospects.
The IMF Mission said that the current macroeconomics conditions in Hong Kong are healthy, providing a conducive environment for a smooth political transition. The Mission noted that a moderate recovery is underway, with a real GDP growth rate reaching 4-1/2 to 4-3/4 per cent in 1996; and that the recovery would continue to broaden and strengthen, reaching a 5-5-1/4 per cent real growth in 1997.
The Mission added that confidence was helped by reassurances made by the Chinese on keeping Hong Kong's economic and legal system intact. In particular, China's commitment to maintain two separate monetary systems and currencies, and two mutually independent monetary authorities was noted. The Mission also pointed out that the rule of law, neutrality of the civil service, impartiality of the judiciary, and freedom of information are values which are key to Hong Kong's economic future.
Under Article IV of the IMF Articles of Agreement, the IMF consults its members and their territories on their economic policies. The IMF annually sends a Mission to conduct an economic review on Hong Kong and has done so since 1990.
Earlier this month, the IMF Staff Mission came to Hong Kong for ten days and held discussions with the private sector and government officials. At the end of the consultation, the Mission summarised its views in a Concluding Statement.
"The independent, candid and authoritative views and advice we receive each year from the IMF are insightful and thought-provoking. They are both important and helpful." said Mr Tsang.
"I am delighted to publish the IMF Mission's views as a further step to promote the openness, transparency and accountability of the public financial systems in Hong Kong."
The IMF Mission gave firm and clear endorsement of the continuation of Hong Kong's existing policy framework prudent fiscal policy, the linked exchange rate and firm financial regulation. The Mission also urged Hong Kong to promote competition policy in the service-based industries.
On monetary policy, the IMF Mission agreed that the linked exchange rate should remain the overriding monetary policy objective and that it is important to the continued economic stability and growth in the future. "In the Mission's view, the linked rate is in line with the fundamentals of the economy and it is backed by substantial and rising reserves," the Concluding Statement pointed out.