XN000022-1996-03-06 — Page 37

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First, land revenue. During the year, land prices have generally been in line with our expectations. Indeed, the total land premia collected in the year will exceed the original estimate. However, the premia for several sites will not be collected until the final quarter of the current financial year. Because of the sharing arrangements with the future Hong Kong Special Administrative Region Government, the Administration will not receive the proceeds of these land premia collected in the final quarter till the next financial year. As a result, our actual receipts of land revenue in 1995-96 will be $3.0 billion less than originally forecast.

Second, recurrent receipts are lower than originally forecast, reflecting the slower pace of economic growth in 1995. The principal shortfalls in receipts are those from motor vehicle first registration tax of $1.5 billion, duties of $0.5 billion and internal revenue of $0.9 billion.

Improved economic performance forecast

The Financial Secretary today forecast in his Budget Day that GDP would grow in 1996 by five per cent in real terms - an improved economic performance from last year with expectation of inflation as measured by the CPI(A), to ease appreciably further to an annual rate of 7.5 per cent.

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Mr Tsang noted that the moderating trend in both domestically-generated and imported inflation that had emerged in the latter part of last year was expected to carry over into the current year.

On the labour front, he expected that the level of unemployment would continue to depend primarily on the labour supply.

He said: "On current indications it seems unlikely the unemployment rate would revert quickly to the very low levels to which we are more accustomed" but on a positive outlook, he believed that the better economic prospects that he was forecasting would bring a gradual improvement to the situation.

Mr Tsang was also optimistic about the trading environment which he expected to be favourable, noting that economic growth in major overseas markets, including the United States, Europe and Japan, was generally improving coupled with the recent easing in interest rates.