XN000022-1985-02-27 — Page 14

12

WEDNESDAY, FEBRUARY 27, 1985

DESPITE THE DRAMATIC FALL IN LAND REVENUE, SIR JOHN SAID WHAT HAD LARGELY MADE THIS POSSIBLE HAD BEEN FIRM RESTRAINT ON THE GROWTH OF PUBLIC SECTOR EXPENDITURE,

+WE HAVE AGAIN IN 1984-85 SUCCESSFULLY HELD ITS GROWTH RATE WELL BELOW THE RATE OF GROWTH IN GDP. THIS CREATES THE NECESSARY BREATHING SPACE WHILST WE AWAIT THE WORKING THROUGH OF ECONOMIC GROWTH TO OUR RECURRENT REVENUE, HE SAID.

THE FINANCIAL SECRETARY PROPOSED TOTAL PUBLIC SECTOR EXPENDITURE ON CONSOLIDATED ACCOUNT OF $45.6 BILLION FOR THE COMING FINANCIAL YEAR.

THE DOWNWARD MOVEMENT IN THE RELATIVE SIZE OF THE PUBLIC SECTOR WOULD BE FROM 19.1 PER CENT IN 1982-83 TO 18.6 PER CENT IN 1983-84 TO THE REVISED ESTIMATE OF 16.4 PER CENT FOR 1984-85 AND TO AN ESTIMATED 16 PER CENT IN 1985-86.

+THIS IS A CONSIDERABLE FALL ON A GDP OF $286 BILLION, HE SAID.

+ IT IS FAR BETTER THAN I INDICATED IN THE LAST BUDGET SPEECH,+ HE ADDED.

NO NEED FOR BOND ISSUE

***

FROM A STRICTLY BUDGETARY POINT OF VIEW THERE IS AT PRESENT NO REASON TO AGAIN CONTEMPLATE A GOVERNMENT BOND ISSUE, THE FINANCIAL SECRETARY, THE HON SIR JOHN BREMRIDGE, SAID TODAY.

NEVERTHELESS, SHOULD ANY PARTICULAR SPECIFIC CAPITAL REQUIREMENT ARISE, HE WOULD BE PREPARED TO CONSIDER BORROWING BY MEANS OF AN APPROPRIATE BOND ISSUE, SIR JOHN SAID.

+ IF FOR EXAMPLE IT PROVES NECESSARY TO INCREASE THE EQUITY OF THE MTR. A GOVERNMENT BOND ISSUE MIGHT BE PART OF AN OVERALL PACKAGE,+ HE SAID.

THE FINANCIAL SECRETARY NOTED THAT IN APRIL LAST YEAR THE GOVERNMENT SOLD BONDS WITH A FACE VALUE OF $1 BILLION BY PUBLIC TENDER. THE EFFECT OF THIS WAS TO AVOID AN EQUIVALENT REDUCTION IN THE FISCAL RESERVES. IT WAS A MEASURE DESIGNED TO FIT THE YEAR'S BUDGETARY STRATEGY.

HE ADDED: THE FACT THAT THE GOVERNMENT CAN BORROW LARGE SUMS OF MONEY MUST BE SET AGAINST THE COSTS INVOLVED, THE POSSIBILITY THAT REPAYMENT MAY FALL DUE AT A TIME WHEN EXTERNAL PROBLEMS ARE AFFECTING OUR EXPORTS AND THUS OUR GDP AND GOVERNMENT REVENUE, THE NEED TO RESTRAIN PUBLIC SECTOR EXPENDITURE, AND THUS THE GENERAL DEBILITY CREATED BY UNNECESSARY BUT EASY BORROWING,+

/13