TNAG-0281-FCO40-317-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster-to-Hong-Ko-1970 — Page 175

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CONFIDENTIAL

Revenue and Expenditure

Sterling Assets

Our reason is that they are able to manage without; if

they run short of development finance, our general attitude

has been that they should raise local loans (the public

debt is very low) or increase taxation. But since we

provide no aid, we cannot exercise control over their

financial policies; the ultimate responsibility of the

Secretary of State is in practice purely formal, and they

are to all intents and purposes financially autonomous.

28.

Annual revenue and expenditure have nearly doubled

since 1963 to £170m. and £139m. respectively in 1969/70.

There was a budget deficit in 1959/60 (£2.8m) and in

1965/66 (£8.6m) but in all other years since 1947 surpluses

have been realised.

A surplus of £9 million is budgeted

for in the current year.

29. Hong Kong is the largest single holder of sterling

assets. These assets now stand at £498 million and

comprise official funds (£278 million) and private funds

(£220 million) held for residents and banks.

SOCIAL SERVICES

30. The great post-war increase in Hong Kong's population

(largely by immigration from China) has involved a

formidable programme of expansion in the social services

- housing, health services, education, water supplies.

Although massive advances have been made in these fields

in the last twenty years, a great deal remains to be done and there are some formidable problems (not confined to

financial considerations) involved.

Hong Kong Department

August, 1970

13- CONFIDENTIAL