SECRET
future the Hong Kong Government does not exclude further
recourse to the market, as required, and subject to
satisfactory terms being available, though on current
forecasts it expects to have returned to a balanced budget by '78/79. With its residual liability in respect of the Mass Transit Railway amounting to HK$5,600 million in 1981,
in addition to the borrowings referred to above, the Hong Kong
Government cannot borrow indefinitely. Moreover it is of
paramount importance not to risk undermining confidence by
adding doubts about its financial soundness to the question
mark that overhangs the Colony's political future. To
off-set the latter a cast-iron financial position is
considered necessary.
6.
Hong Kong has not created for itself the tools of
fiscal and monetary management normal elsewhere. For instance
there is no central monetary authority. The money supply
is largely determined by Hong Kong's external payments
position and the note circulation by the three issuing banks
is backed by foreign exchange assets held by the Exchange Fund.
Social
7.
The Government's current programmes of principal
U.K. interest are described in detail in Annex D. The four
main areas of its social programme are:-
(a) a ten-year housing plan designed to provide subsidised self-contained housing in a reasonable environment for all unable to pay market rents;
(b) a five-year plan for the development of existing social welfare services (e.g., non-contributory means-tested public assistance scheme, non-contributory non means-tested allowances
to "vulnerable groups" such as the disabled or aged and emergency
relief) to include improved community services for deprived
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