XN000022-1991-03-06 — Page 27

WEDNESDAY, MARCH 6, 1991

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GOVT'S EFFORTS TO BETTER CONTROL

EXPENDITURE GROWTH ARE BEARING FRUIT

THE GROWTH OF RECURRENT EXPENDITURE IS UNDER BETTER CONTROL AND THE GOVERNMENT'S EFFORTS ARE NOW BEARING FRUIT, THE FINANCIAL SECRETARY, THE HON SIR PIERS JACOBS, SAID TODAY (WEDNESDAY).

SUMMARISING THE MAIN FEATURES OF THE ESTIMATES FOR THE NEW FINANCIAL YEAR AND THEIR IMPLICATIONS FOR PUBLIC FINANCES IN HIS BUDGET FOR 1991-92, SIR PIERS SAID:

"ALTHOUGH CAPITAL EXPENDITURE WILL CONTINUE TO GROW RATHER MORE RAPIDLY, OUR STRONG RECURRENT POSITION WILL PRODUCE A SURPLUS SUFFICIENT TO COVER MORE THAN HALF OF THAT EXPENDITURE.

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HE SAID THERE WOULD BE AN OVERALL SURPLUS TO BE ADDED TO THE GOVERNMENT'S RESERVES.

AND ON THE REVENUE SIDE, SIR PIERS SAID THE MEASURES HE SHOULD BE PROPOSING WOULD MAINTAIN THE PROPORTION OF TAX REVENUE ACCRUING FROM DIRECT TAX AT 60 PER CENT, AS IN 1990-91.

THE FINANCIAL SECRETARY SAID IT WAS IMPORTANT TO RECOGNIZE THAT THE DRAFT ESTIMATES FOR 1991-92 HAD IMPLICATIONS FOR THE PUBLIC FINANCES WHICH EXTENDED WELL BEYOND THE YEAR OF ACCOUNT.

"I WISH TO COMMENT ON THESE IMPLICATIONS IN THE CONTEXT OF THE UPDATED MEDIUM RANGE FORECAST, WHICH COVERS THE PERIOD UP ΤΟ AND INCLUDING 1994-95, HE SAID.

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SIR PIERS POINTED OUT THAT ONE OF THE MOST IMPORTANT ASSUMPTIONS IN UPDATING THE MEDIUM RANGE FORECAST CONCERNED THE FUTURE PERFORMANCE OF THE ECONOMY AND PARTICULARLY THE GROWTH IN GDP.

"WE HAVE CONTINUED TO ASSUME A TREND GROWTH RATE FOR GDP OF 5.5 PER CENT IN REAL TERMS. THIS IS A TREND RATE AND INDIVIDUAL YEARS MAY WELL VARY FROM THAT TREND.

"IT IS ALSO INEVITABLE THAT THERE WILL BE SOME UNEVENNESS IN OUR EXPENDITURE, HE SAID.

*

NEVERTHELESS, THESE FACTORS DID NOT INVALIDATE USING THE TREND RATE AS A PLANNING TOOL.

SAID

DURING THE PERIOD FROM 1991-92 TO 1994-95, SIR PIERS OVERALL PUBLIC EXPENDITURE WOULD GROW BY AN AVERAGE OF 6.2 PER CENT PER ANNUM.

THIS FIGURE, MARGINALLY HIGHER THAN THE TREND GROWTH RATE OF GDP, COMBINED BOTH RECURRENT AND CAPITAL EXPENDITURE.

THE GROWTH RATE FOR RECURRENT EXPENDITURE WAS, AT 5.2 PER CENT, WITHIN THE TREND GROWTH RATE, WHEREAS CAPITAL EXPENDITURE WAS FORECAST TO GROW AT A SOMEWHAT HIGHER RATE OF 8.3 PER CENT, HE SAID.

/"NOTWITHSTANDING THE