XN000022-1981-02-25 — Page 11

WEDNESDAY, FEBRUARY 25, 1981

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FISCAL RESERVES SET TO REACH $10 300 M

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HONG KONG'S FISCAL RESERVES WILL INCREASE FROM $5 716 MILLION LAST APRIL TO $10 300 MILLION AT APRIL 1 THIS YEAR, THE FINANCIAL SECRETARY TOLD THE LEGISLATIVE COUNCIL THIS (WEDNESDAY) AFTERNOON.

THIS WAS THE EQUIVALENT OF 42 PER CENT OF THE 1981-82 BUDGETTED EXPENDITURE OF $24 670 MILLION COMPARED WITH THE 31 PER CENT OR $18 332 MILLION FOR 1980, THE HON SIR PHILIP HADDON-CAVE SAID IN PRESENTING HIS BUDGET REPORT.

THIS PERCENTAGE, HE SAID WAS DISTINCTLY BETTER THAN THE GUIDELINE OF 15 PER CENT,

FISCAL RESERVES, SIR PHILIP EXPLAINED, TOGETHER WITH THE BALANCES IN VARIOUS FUNDS AND THE EXCHANGE FUND'S SURPLUS, REPRESENTED THE NET FINANCIAL ASSETS OF THE HONG KONG GOVERNMENT.

+APART FROM THE TREASURY'S CURRENT CASH REQUIREMENTS, THE BULK OF THE FINANCIAL ASSETS ARE HELD IN THE EXCHANGE FUND, AND PLACED BY THE FUND IN BANK DEPOSITS IN HONG KONG DOLLARS AND FOREIGN CURRENCIES AND IN VARIOUS INTEREST BEARING INSTRUMENTS IN FOREIGN CURRENCIES, HE SAID.

SIR PHILIP SAID THE FUND TRANSACTED ITS BUSINESS THROUGH 87 BANKING, SAFE CUSTODY AND SECURITY ACCOUNTS LOCATED IN 13 COUNTRIES, REFLECTING THE EXTENSIVE PROGRAMME OF DIVERSIFICATION, IN TERMS OF BOTH CURRENCIES AND MANAGEMENT, OF OUR FINANCIAL ASSETS OVER THE PAST SEVEN YEARS SINCE THE END OF 1974.

FISCAL RESERVES, HE SAID, HAD SEVERAL ROLES, THE FIRST BEING PROVISION HAVING TO BE MADE TO COVER CONTINGENT LIABILITIES WHICH WOULD ALSO SECURE CREDIT RATING IN INTERNATIONAL CAPITAL MARKETS.

WITH +FREE+ FISCAL RESERVES AVAILABLE, IMPLEMENTATION OF THE GOVERNMENT'S ON-GOING POLICIES AND PROGRAMMES WOULD NOT BE AFFECTED IF COMMITMENTS AND SITUATIONS INVOLVED EXPENDITURE EXCEEDING REVENUE OR REVENUE YIELDS FELL BELOW EXPECTATIONS.

HE ALSO EXPLAINED THAT IF OUR +FREE+ FISCAL RESERVES EXCEEDED THE MINIMUM GUIDELINE RATIO OF 15 PER CENT OF BUDGETTED FOR EXPENDITURE IN THE FOLLOWING YEAR. THEY WOULD BE AVAILABLE FOR SUCH PURPOSES AS THE PURCHASE OF EQUITY IN TRADING ENTERPRISES (SUCH AS THE MTRC) AND THE PLACING OF STATUTORY FUNDS, SUCH AS THE DEVELOPMENT LOAN FUND, IN A POSITION TO MEET THE IR COMMITMENTS, +FOR THERE IS NO REASON WHY ANNUAL REVENUES SHOULD NECESSARILY HAVE TO MEET THESE PARTICULAR CALLS,+

+ IN ADDITION, THEY WILL ENABLE US TO BLEND GRANTS FROM GENERAL REVENUE WITH DEBT FINANCE FOR SUCH LARGE, LUMPY AND EXPENSIVE WORKS PROJECTS AS A NEW AIRPORT OR FIXED HARBOUR CROSSINGS WHICH WE MAY EVENTUALLY DECIDE TO EMBARK UPON IN THE 1980'S OUTSIDE THE PUBLIC WORKS PROGRAMME ITSELF, HE ADDED.

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