XN000022-1992-03-04 — Page 8

WEDNESDAY, MARCH 4, 1992

"AS A RESULT, THE FALL IN THE RATE OF INFLATION WILL NOT BE

HE SAID. SUBSTANTIAL AS WE WOULD WISH,

AS

PRICE INDEX (A) WOULD

THE FORECAST WAS THAT THE CONSUMER INCREASE BY AN AVERAGE OF 9.5% THIS YEAR, HE SAID.

MADE FOR

MR MACLEOD SAID AMONG THE PROPOSALS WHICH HAD BEEN ATTACKING INFLATION WAS ADJUSTMENT TO THE LINKED EXCHANGE RATE.

HOWEVER, MAIN REASONS.

HE REJECTED CALLS FOR ANY CHANGE IN THE LINK FOR

"FIRST, THOSE IN FAVOUR OF THIS STRATEGY CLAIM THAT BEEN IMPORTING INFLATION BECAUSE OF AN UNDERVALUED CURRENCY,"

TWO

WE HAVE

HE SAID THE EVIDENCE POINTED TO THE OPPOSITE.

IMPORT

THE

MOREOVER, SINCE PRICES ROSE BY ONLY 2% LAST YEAR. GOVERNMENT INTRODUCED THE LINKED RATE SYSTEM IN 1983, THE CURRENCY HAD ACTUALLY INCREASED IN VALUE BY NEARLY 10%.

"THIS HAS ENABLED US TO BENEFIT FROM LOWER IMPORT PRICES WOULD OTHERWISE HAVE BEEN THE CASE," HE SAID.

YET DOMESTIC INFLATION HAD REMAINED HIGH.

SECONDLY, MR MACLEOD POINTED OUT THAT THE PROVED ITS VALUE TO HONG KONG SINCE 1983.

THAN

LINK HAD CLEARLY

"WE HAVE ENJOYED A ROBUST AND STABLE CURRENCY DESPITE TRAUMATIC POLITICAL AND ECONOMIC EVENTS.

"CONSEQUENTLY, I WANT TO TAKE THIS OPPORTUNITY TO REAFFIRM GOVERNMENT'S COMMITMENT TO THE LINK AS AN ESSENTIAL ELEMENT. IN STABLE FINANCIAL SYSTEM WHICH IS SO IMPORTANT FOR HONG KONG,

ANOTHER

MACLEOD

SAID,

WAS

THAT SUGGESTION, MR EXPENDITURE WAS SOMEHOW A SOURCE OF INFLATIONARY PRESSURES,

THE

THE

.

HE SAID.

GOVERNMENT

"THE FACT IS THAT GOVERNMENT SPENDING HAS ONLY A LIMITED IMPACT KONG'S PUBLIC ON INFLATION. THIS IS NOT HARD TO EXPLAIN SINCE HONG

SHARE OF

HE A RELATIVELY MODEST SECTOR ACCOUNTS FOR ONLY STRESSED.

ON AN ADVICE TO BEAT INFLATION BY RAISING FINANCIAL SECRETARY SAID HE FULLY AGREED WITH IT.

GDP,"

PRODUCTIVITY,

THE

FOR

GROWTH IN

"WE TAKE VERY SERIOUSLY THE NEED TO EXPLOIT OPPORTUNITIES RCONOMY AND EFFICIENCY AND INDEED ARE EFFECTIVELY KEEPING THE CIVIL SERVICE TO ZERO.

"WE SHALL BE PUSHING ON WITH PUBLIC SECTOR REFORM.

"WE

ARE CREATING

UNIT.

WE

ARE ENCOURAGING AN EFFICIENCY

COMMERCIAL- GREATER ACCOUNTABILITY, AND CONSIDERING PRIVATISATION OF TYPE OPERATIONS," HE SAID.

/FOR THE