XN000022-1984-09-14 — Page 4

3

FRIDAY, SEPTEMBER 14, 1984

WHILE BELIEVING THAT HIS BUDGET FORECAST OF A DOWNWARD TREND TO ABOUT SEVEN PER CENT BY THE END OF THIS YEAR WOULD BE

+

ACHIEVED, HE SAID, IT WILL BE IMPORTANT TO MAINTAIN OUR SUCCESS NEXT YEAR. SEVEN PER CENT REMAINS TOO HIGH, +

SIR JOHN SAID THAT GOVERNMENT REVENUES STILL FELT THE EFFECT OF THE 1982 RECESSION, NOTABLY BECAUSE OF THE DEPRESSED STATE OF THE PROPERTY MARKET AND THE POOR PERFORMANCE OF SOME COMPANIES.

HOWEVER, EVEN WITHOUT TAKING THE SUCCESSFUL $1 BILLION BOND ISSUE INTO ACCOUNT, HE EXPECTED AN +APPRECIABLY SMALLER+ DEFICIT THAN THE BUDGETED $2.1 BILLION FOR THE CURRENT FINANCIAL YEAR.

HE SAID THAT THE LATEST PRELIMINARY INDICATION OF EXPENDITURE ON CONSOLIDATED ACCOUNT IN 1984-85, BASED ON PERFORMANCE OVER THE FIRST FIVE MONTHS, IS $42.4 BILLION, A DECREASE OF UP TO $1.6 BILLION BELOW THE BUDGET ESTIMATE.

+ IF THIS IS PROVED TO BE CORRECT IN THE COURSE OF TIME, AS COMPARED WITH THE ACTUAL EXPENDITURE OF $38.7 BILLION FOR 1983-84, IT WILL IMPLY AN INCREASE OF 9.6 PER CENT IN MONEY TERMS, OR ONLY ABOUT TWO PER CENT IN REAL TERMS. I HAVE NO DOUBT THAT THE PUBLIC SECTOR WILL BE AT LEAST SIMILARLY CONSTRAINED NEXT YEAR,+ HE SAID.

AT PRESENT, THERE IS NEVERTHELESS AN OUTSTANDING COMMITMENT OF ABOUT $20.3 BILLION FOR PUBLIC WORKS PROJECTS IN HAND.

+THIS REPRESENTS A CONTINUING INVESTMENT IN SOCIAL AND ECONOMIC INFRASTRUCTURE AND ILLUSTRATES THE GOVERNMENT'S FIRM INTENTION OF INVESTING VIGOROUSLY IN THE FUTURE.

+ I HAVE NO TIME FOR STOP AND GO TACTICS. CALMNESS AND STEAD INESS OF PURPOSE ARE ESSENTIAL, AND WE REMAIN WELL ON OUR PLANNED COURSE - DESPITE A SERIES OF TROPICAL STORMS, SIR JOHN STATED.

ON THE IMPLICATIONS OF HIS REVISED GDP FORECAST, SIR JOHN SAID THAT ECONOMIC GROWTH WOULD CONTINUE TO BE EXPORT-LED THIS YEAR.

+AS DOMESTIC DEMAND REMAINS MODERATE, AGGREGATE DEMAND IN THE ECONOMY IS NOT IMPOSING UNDUE PRESSURE ON AGGREGATE SUPPLY

THE OF RESOURCES AND HENCE, ON THE GENERAL PRICE LEVEL. FORECAST INCREASES IN THE GDP DEFLATOR AND IN THE CPI REMAIN AT NINE PER CENT, AS GIVEN IN THE BUDGET, HE SAID.

WITH THE NEW GDP ESTIMATE AND THE LIKELY DOWNWARD REVISION TO THE EXPENDITURE ON THE CONSOLIDATED ACCOUNT, THE FORECAST OF THE RELATIVE SIZE OF THE PUBLIC SECTOR IS FURTHER REDUCED TO ABOUT 17.5 PER CENT, COMPARED WITH HIS BUDGET ESTIMATE OF 18.3 PER CENT.

/+THE COMPARATIVE