XN000022-1982-09-30 — Page 6

THURSDAY, SEPTEMBER 30, 1982

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RECALLING THAT IN HIS BUDGET SPEECH HE HAD PROMISED TO MONITOR CLOSELY THE GROWTH RATE OF PUBLIC SECTOR EXPENDITURE AND THE RELATIVE SIZE OF PUBLIC SECTOR IN RELATION TO THE GDP HE SAID HE FULLY AGREED WITH THE UNOFFICIALS' VIEWS ON THE NEED FOR FIRM CONTROL.

MR BREMRIDGE SAID THE BUDGET ESTIMATE OF EXPENDITURE ON THE CONSOLIDATED ACCOUNT FOR THIS YEAR WAS $37.7 BILLION, REPRESENTING AN INCREASE OVER 1981-82 OF 22 PER CENT IN MONEY TERMS.

+THE LATEST ESTIMATE OF ANNUAL EXPENDITURE ON CONSOLIDATED ACCOUNT, BASED ON PERFORMANCE OVER THE FIRST FIVE MONTHS, IS $39.7 BILLION, REPRESENTING AN INCREASE OF $2 BILLION OVER THE BUDGET ESTIMATE.

+THE UPWARD REVISION IS DUE PARTLY TO LAND ACQUISITION AND OTHER CAPITAL EXPENDITURE IN EXCESS OF SAVINGS ELSEWHERE BUT IN THE MAIN TO CIVIL SERVICE PAY INCREASES.

+THE LATTER (INCLUDING THE ASSOCIATED SUBVENTED SECTOR) REPRESENTED A RISE OF ABOUT $1.6 BILLION DUE TO THE ANNUAL INCREASE, FOR WHICH AS USUAL IN THE PAST NO FORWARD PROVISION WAS MADE, HE SAID.

MR BREMRIDGE SAID FURTHER THAT THE PUBLIC EXPENDITURE GROWTH RATE STILL REQUIRES CLOSE MONITORING FOR THE REST OF THE YEAR, AND WILL HAVE TO BE SLOWED DOWN FURTHER NEXT YEAR, TO ENSURE THAT WHEN THE RECOVERY COMES IN OVERSEAS ORDERS, SUFFICIENT RESOURCES AT COMPETITIVE PRICES ARE AVAILABLE TO THE PRIVATE SECTOR.

+THIS WILL INVOLVE CAREFUL SELECTION OF PRIORITIES AS GOVERNMENT CARRIES ON STEADILY AND CONSISTENTLY WITH ITS MAJOR PROGRAMMES. HAVE NO DOUBT THAT WE WILL SO CONTINUE, HE SAID.

MR BREMRIDGE SAID THAT THE PROPERTY MARKET WAS AN AREA IN WHICH HIGH INTEREST RATES HAD HAD A MARKED DAMPENING EFFECT ON ACTIVITY+.

+AS A CONSEQUENCE OF HIGH RATES, A STAGNANT EXPORT PERFORMANCE AND AN ABUNDANT SUPPLY OF LAND AND NEW PROPERTY IN THE MARKET PRICES AND RENTALS HAVE GENERALLY BEEN FALLING THROUGHOUT THIS YEAR, THOUGH THERE ARE NOW SIGNS OF LEVELLING OFF.+

THE CONDITION OF THE PROPERTY MARKET IS BUT ONE JUSTIFICATION, HE SAID, FOR THE SYSTEM OF CONTINUOUS, CAREFUL MONITORING OF THE LIQUIDITY OF BANKS AND DTC'S.

+THE POSITION IS SATISFACTORY, HE ADDED.

HE SAID THAT IN TERMS OF THE EFFECTIVE EXCHANGE RATE INDEX, THE EXCHANGE VALUE OF THE HONG KONG DOLLAR HAD STRENGTHENED BY ABOUT SEVEN PER CENT SINCE THIS TIME LAST YEAR, WHILE, FOR EXAMPLE, THE VISIBLE TRADE GAP FOR THE PERIOD JUNE TO AUGUST HAD NARROWED FROM 11 PER CENT TO 7.4 PER CENT.

THE OVERALL PERFORMANCE OF THE HONG KONG CURRENCY HAS BEEN GOOD, HE SAID.

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