XN000022-1991-02-03 — Page 2

SUNDAY, FEBRUARY 3, 1991

ADEQUATE RESERVES AND PRUDENT MANAGEMENT VITAL TO SUCCESS

HONG KONG'S FINANCIAL STRATEGY IS ROBUST BNOUGH TO ACCOMMODATE ANY IMMEDIATE PROBLEMS ARISING FROM THE GULF CRISIS AND TO MEET THE TERRITORY'S NEEDS OVER THE MEDIUM TO LONG TERM, THE FINANCIAL SECRETARY, SIR PIRRS JACOBS, SAID TODAY (SUNDAY).

CLUB, SIR

IN A LUNCHEON SPEECH TO THE ASIAN PACIFIC BANKERS PIERS SAID THAT HONG KONG'S FINANCIAL PLANNING SYSTEMS WOULD ENABLE THE COMMUNITY TO WEATHER THE PERIOD OF UNCERTAINTY WITH GOVERNMENT POLICIES AND PROGRAMMES INTACT.

HE SAID THE GOVERNMENT'S MAJOR GUIDING PRINCIPLE IN PLANNING PUBLIC EXPENDITURE MUST BE TO ENSURE AS FAR AS POSSIBLE THAT EXPENDITURE WAS CONTAINED BY ECONOMIC GROWTH RATHER THAN ALLOWED ΤΟ RUN AHEAD OF SUCH GROWTH.

AVERAGED BETWEEN 16 PER CENT AND 18 PER CENT OF GROSS DOMESTIC PRODUCT, OUR PUBLIC SECTOR EXPENDITURE WAS BIG ENOUGH FOR THE GOVERNMENT'S PERFORMANCE IN MANAGING IT TO HAVE A SIGNIFICANT IMPACT ON HONG KONG'S OVERALL PROSPERITY.

ᎨᏐ

IN PLANNING OUR EXPENDITURE IN RELATION TO THE GROWTH RATE OF THE ECONOMY, WE SHOULD ALSO RECOGNISE THAT WE MUST NOT ABSORB MORE THAN OUR FAIR SHARE OF THE LABOUR FORCE IF OUR ECONOMY IS TO CONTINUE TO GROW.

"ACCORDINGLY, IN RECENT YEARS WE HAVE ATTEMPTED TO MAINTAIN A TIGHTER CONTROL OVER THE GROWTH RATE OF THE CIVIL SERVICE.

NEED

"ANOTHER BUDGETARY GUIDELINE WE HAVE SET OURSELVES IS THE ΤΟ MAINTAIN RESERVES AT ADEQUATE LEVELS, HE SAID, ADDING THAT "ADEQUATE" WAS SOMETHING HE DISCUSSED IN HIS BUDGET SPEECH LAST YEAR.

"WHAT WE SEEK TO ACHIEVE IS A REASONABLE SURPLUS TAKING A NUMBER OF YEARS TOGETHER. THIS IN TURN REQUIRES A CONSISTENT REVENUE POLICY."

**

HE POINTED OUT THAT COMPARED WITH EXPENDITURE FORECASTS, THE FORECASTING AND CONTROL OF REVENUE WAS "FAR MORE HAZARDOUS".

"ONCE EXPENDITURE CEILINGS HAVE BEEN AGREED AND EXPRESSED IN BUDGET ALLOCATIONS, THESE ALLOCATIONS AND THUS THE CEILING CAN BE STRICTLY CONTROLLED. BUT REVENUE CANNOT BE CONTROLLED IN THE SAME WAY,' HE SAID.

*T

NEVERTHELESS THE GOVERNMENT HAD ESTABLISHED SOME BROAD BUDGETARY GUIDELINES PARTICULARLY IN RELATION то THOSE AREAS OF REVENUE WHERE IT HAD SOME MEASURE OF CONTROL.

CHARGES,

"FOR EXAMPLE, WE SEEK TO MAINTAIN THE REAL YIELD FROM FRES AND

AND WE REGULARLY REVIEW THE VARIOUS TAX THRESHOLDS SO AS TAKE ACCOUNT OF INFLATION,

ΤΟ

/"REVENUE FROM