XN000022-1984-04-25 — Page 2

WEDNESDAY, APRIL 25, 1984

BALANCED BUDGETS POSSIBLE FROM 1986

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SIR JOHN

GOVERNMENT BUDGETS COULD BE BALANCED OVER A CYCLE OF YEARS FROM 1986, THE FINANCIAL SECRETARY, THE HON SIR JOHN BREMRIDGE, SAID IN THE LEGISLATIVE COUNCIL TODAY.

+1 DO NOT ACCEPT THAT AN ENDEMIC BUDGETARY DEFICIT EXISTS IN HONG KONG. THOUGH THIS IS NOT THE GENERAL EXPERIENCE ELSEWHERE, WE SEEK TO PRESENT A UNIQUE EXAMPLE, SIR JOHN SAID AT THE RESUMED BUDGET DEBATE.

THE GOVERNMENT WAS THUS SET ON A +MEASURED AND CALM

ADJUSTMENT+ MADE NECESSARY BY THE COLLAPSE OF LAND REVENUES, HE SAID.

THE LAST TWO ANNUAL DEFICITS HAVE BEEN $3.5 BILLION AND $3,1 BILLION, AND A DEFICIT OF $2.1 BILLION IS FORECAST FOR 1984-85.

+THERE WILL PROBABLY BE A DEFICIT IN 1985-86, BUT IT SHOULD AGAIN BE WELL UNDER ONE PER CENT OF GDP. THIS IS RELATIVELY VERY SMALL-IN FACT ARGUABLY WITHIN ACCEPTABLE MARGINS OF COMBINED ESTIMATED REVENUE AND EXPENDITURE FLUCTUATION, HE SAID.

THE IMPROVING TREND, HE ADDED, WAS OBVIOUS AND MORE MARKED WHEN RECKONED IN PERCENTAGE TERMS A LOWER DEFICIT ON RAPIDLY GROWING GDP.

+NOR DOES IT ARISE BY CHANCE.

HAVING TAKEN AN UNEXPECTED

25 PER CENT DROP IN REVENUE, THIS CALM AND DELIBERATE ADJUSTMENT SEEMS MORE INTELLIGENT THAN WIELDING A FUNDAMENTALIST AXE,+ HE SAID.

ON THE POSSIBLE RETURN TO BUDGET EQUILIBRIUM FROM 1986, SIR JOHN SAID, +BUT LET US NOT COUNT OUR CHICKENS YET. ADDITIONALLY THERE CAN BE NO OBJECTION TO MODERATE BORROWING FOR CLEARLY PROFITABLE CAPITAL INVESTMENT, AS LONG AS RECURRENT REVENUE COMFORTABLY EXCEEDS RECURRENT EXPENDITURE.+

AS HONG KONG'S ECONOMY IS ENTIRELY SUBJECT TO UNCONTROLLABLE EXTERNAL EVENTS, SIR JOHN SAID, THE GOVERNMENT'S FINANCES MUST ALWAYS BE CONSERVATIVELY DIRECTED.

+ IT IS FOR THIS REASON, WITH TRADE REPRESENTING 163 PER CENT OF GDP, THAT LONG-TERM DETAILED BUDGETARY PLANNING IS QUITE IMPRACTICABLE. WE MUST STAY QUICK ON OUR FEET AND QUICK TO REACT TO SITUATIONS THAT CANNOT BE FORESEEN, HE ADDED.

ON CURRENCY ISSUES, SIR JOHN TOLD THE COUNCIL THAT THE HON ALLEN LEE'S SUGGESTION TO FLOAT THE HONG KONG DOLLAR AGAIN DID NOT MERIT CONSIDERATION AT THIS JUNCTURE.

WHILE SHARING MR LEE'S CONCERN OVER INFLATION, SIR JOHN SAID THE STABILISATION MEASURES FOR THE HONG KONG DOLLAR HAD BEEN +MORE SUCCESSFUL THAN I DARED HOPE.+

+TO SUGGEST THAT A PATIENT RESTORED INTO GOOD HEALTH SHOULD DELIBERATELY AGAIN BE EXPOSED TO RISK SEEMS EXUBERANT LATERAL THINKING, HE ADDED.

/ON VARIOUS

The