XN000022-1972-03-29 — Page 4

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Wednesday, March 29, 1972

The Financial Secretary said that the size of Hong Kong's reservos amounting to $3,923 million had to be assessed in terms of total expenditure.

On April 1, 1972, they would amount to 108 per cent of estimated

expenditure in 1972-73 of $3,657 million; compared with 84 per cent in

1971-72 when the reserves had been $2,475 million and expenditure $2,930 million; compared with 65 per cent in 1968-69 when the reserves had been $1,173 million and expenditure $1,873 million.

"Clearly, we are well protected against any short term slackening

of the rate of growth of revenue, but we must not forget, secondly, that capital revenue only finances a proportion of capital expenditure," he pointed out.

Capital Expenditure

In years of high land sales and/or relatively low capital expenditure that proportion had been as high as 60 per cent but, conversely, in years of low land sales and/or high capital expenditure the proportion was much lower; and, with the very high levels of capital expenditure to be expected in the next few years, the proportion would be as low as 15 to 25 per cent,

he said.

"In 1972-73 it is put at 25 per cent, as Honourable Members will see

from Appendix III of the Estimates," he added.

In absolute terms, of estimated capital expenditure in 1972-73

of $1,131 million, only $287 million would be financed from capital revenue

and in 1975-76 probably only about 15 per cent of forecast capital expenditure of $1,400 to $1,500 million would be so financed, he said.

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