*
2. In your telegrams No.6 and No.533 you envisage
that the Colony will be able to balance its budget
in 1947/48 so far as recurrent expenditure is
concerned, but that special expenditure to be met
from loan funds will amount to $60,000,000 in addition
to the $40,000,000 in 1946/47 referred to in your
telegram No.450. Further special expenditure will
doubtless be required in subsequent years. In addition
there is a possible liability in respect of war damage
compensation which you suggested in paragraph 10. of your
despatch No.164 may be as high as $740,000,000.
3. I would also refer to my telegram No.476 regarding
expenditure in Macɛo and to. your reply No.534. of the
total Foreign Office claim of £478,629, £11,509 relates
to expenditure on pensions and salaries of Hong Kong
Government officials and I assume, that there will be no
difficulty in meeting this expenditure, provided it is
satisfactorily vouched, from Hong Kong Government funds,
and that it is only in respect of that part (£467,120)
of the claim relating to relief, to which political
objection may be raised. In paragraph 3 of your
telegram No.534, in addition to the expenditure in Macao,
you refer to possible objections being raised to Hong Kong
being charged with expenditure on the return passages
of those who were sent to the United Kingdom and other
countries after the liberation of the Colony, and with
the expenditure on the demobilisation and pensions of
the Hong Kong volunteers. This latter question was also
referred to in your savingram No.464 of 30th December 1946.
It is observed from your telegram No. 589 that the expenditare
on passages and on the volunteers has been charged
temporarily to a suspense account pending a decision as to
the final incidence of charge.
L. It is clear that in any event the total financial
liabilities with which the Colony will be faced are
extremely heavy, and in bøder that I may be in a better
position
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