XN000022-1972-03-01 — Page 33

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Wednesday, March 1, 1972

This figure compares favourably with $1,726 million two years

ago and $1,173 million at March 31, 1968 after Hong Kong had borne

the strain of the devaluation of sterling.

Mr. Haddon-Cave pointed out that in considering Hong Kong's

reserve position the main, and indeed the primary, determinant of incomeв

and hence of revenue yields, "is the economy's export performance over

which we can exercise but a limited degree of control",

"This exposed external position means that we must maintain

a strong roserve position in relation to annual expenditure," he strogsed.

"Obviously, should our trade and hence the growth of our revenue

ever slacken off seriously we must be in a position to maintain recurrent services and the level of capital expenditure either until the rate picks up again or, if this takes too long and our reserves are in danger of being rapidly depleted, until we can cut the rate of growth of

expenditure methodically."

The Financial Secretary pointed out that that would not be easy.

A eutback of plans for a steady expansion of recurrent services

could only be achieved at a social and administrative cost, he said.

To slow down expenditure on capital works would probably be costly

in the sense that nugatory expenditure would be involved, he added.

In addition, such a slowdown would certainly be difficult to

organise, not only because of the problem of selecting the projects to

be slowed down, but also because of the sheer size of the Public Works

Programme, he said.

The expenditure commitment as at February 9 in Category A projects

in the Public Works Programme was a massive $3,424 million compared with

only $1,736 million about the same time in 1971.

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