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The IMF Mission also welcomed initiatives by the Hong Kong Monetary Authority (HKMA) to improve the financial sector infrastructure, including the implementation of the Real Time Gross Settlement system to minimise payment risk in interbank transactions. The Mission also endorsed HKMA's priority on maintaining. high standards of prudential supervision.

"We are pleased to learn that the IMF Mission, after a thorough and rigorous analysis, has found that our policies and principles are sound," said the Chief Executive of the HKMA, Mr Joseph Yam.

On fiscal policy, the IMF Mission supported Hong Kong's traditional non- interventionist approach and the principle of a small government. It advised the government to resist calls for fiscal stimulus to encourage the recovery that is underway. Despite a medium term forecast of an annual budgetary surplus representing 1 to 2 per cent of GDP, the IMF Mission urged continued fiscal prudence to offset upward pressure on inflation and the real exchange rate. The IMF Statement noted that land revenues will constitute a greater proportion of overall government revenues and urged that "over the medium term, expenditures should continue to be primarily covered by recurrent rather than capital revenues".

The IMF Mission acknowledged the important steps taken by the authorities to deregulate markets. Noting that future development would depend critically on the competitiveness in the service-based industries, the IMF Mission encouraged the authorities to move even faster on promoting competition in such areas as telecommunications, transportation, utilities and broadcasting.

"Given the sound fundamentals of Hong Kong's economy, increased transparency can only strengthen investor interest and confidence in Hong Kong's future," the Concluding Statement said.

End

Governor visits Kowloon City district

The Governor, the Rt Hon Christopher Patten, was updated on the general situation in Kowloon City district during his visit today (Wednesday).

Mr Patten first visited the Hong Kong Eye Hospital where he was briefed on the ophthalmic services provided by the hospital. The Hong Kong Eye Hospital has been in operation since 1992 to provide secondary ophthalmic service for patients in the Kowloon region. It also organises regular ophthalmology training programmes for student nurses and doctors.

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