XN000022-1996-02-07 — Page 52

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(b)

The above arrangement ensures that the Government is able to meet its liquidity requirements and to insulate the fiscal reserves from the various investment risks that would otherwise have to be assumed if they were directly invested in financial assets.

The rates of return of fiscal reserves deposited with the Exchange Fund as shown in the last column of the table at (a) above differ from the rates of return of the Exchange Fund in the corresponding periods. The Exchange Fund's figures for 1993 and 1994 are 6.80% and 0.28% respectively. The year end figure for 1995 is not yet available.

The major reason accounting for the difference is that while the rates of return of fiscal reserves are affected by the prevailing interest rates which are determined at the time of placement, the corresponding rates of return of the Exchange Fund are affected by a host of other factors, e.g. currency fluctuations, movements in interest rates and prices of bonds and equities. Unlike the fiscal reserves, the Exchange Fund needs. to assume investment risks through exposure to different financial assets in various currency markets.

The Exchange Fund uses calendar year accounting periods. To facilitate direct comparison between the Exchange Fund and the fiscal reserves, the data provided are on the basis of the Exchange Fund's financial years.

Theft or embezzlement in post office

Following is a question by the Hon Li Wah-ming and a written reply by the Secretary for Economic Services, Mr Gordon Siu, in the Legislative Council today (Wednesday):

Question:

It is learnt that during the period from 1992 to 1993, the losses suffered by the Post Office as a result of embezzlement or theft amounted to some $400 000. In this connection, will the Government inform this Council of the following: