XN000022-1976-04-07 — Page 7

ON

Wednesday, April 7, 1976

"I seriously intended that we should spend up to the provision in

the Approved Estimates of $1,626 million and no instructions were issued

during the year to the contrary."

He disagreed with Mr. Li's "magical forecast" that the budgetted

deficit of 355 million for this financial year would just disappear.

He regarded "with equanimity" the prospect of a deficit of $300

million or so in 1976-77, provided we aim to return to a situation of overall

balance no later than 1978-79,"

Referring to the role of loan finance, Mr. Haddon-Cave said there

was a continuing need for this, on a highly selective basis, for self-

liquidating projects already in the public works programme.

There was also a place for loan finance for self-liquidating projects

outside the public works programme such as industrial estates and the flats

for sale scheme.

The Government, the Financial Secretary said, must monitor the

totality of these debt commitments so that its credit-worthiness was not

jeopardised and debt servicing charges did not become excessive.

Referring to the Hon. Francis Tien's concern that the capacity of

the building industry might fall short of total desired demand of the public

sector and the private sector, Mr. Kaddon-Cave promised that the situation would

be "monitored carefully."

He said "the Government, as a client of the industry, does not wish

to see project estimates escalating sharply.

"So we shall be, among other things, watching the trend of tender

prices very carefully as the weeks go by."