TNAG-0735-FCO40-939-Policy-objective-for-the-developing-of-Hong-Kong-in-the-1980-1978 — Page 162

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CONFIDENTIAL

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The Economy:

the Governor predicts that Government revenue will exceed the original estamate by HK$1 bn, largely because of bouyant land sales; some of this will be absorbed by increased expenditure, but there is still likely to be another big budget surplus this year.

GDP is now expected to grow by 10% (compared with an expected 9% at the time of the budget in March). The Governor's general tone is optimistic, though he does express some concern about the level of domestic demand (this contrasts with a much more cautious recent appraisal by the Bank of England, which pointed out that the deficit on Hong Kong's visible trade account in the first eight months of this year already exceeds the previous highest level for an entire year, largely because of increased consumer demand).

The Public Service: the Governor announced that over

the next year particular efforts will be made to improve staff management in the Government Service.

Narcotics: the Governor was able to report that initial data from the Government's new computerized register of addicts suggests that there may be less than half the number of addicts that was previously supposed. This plus a number of other welcome devel- opments, including especially the continued drop in the number of young people becoming involved in drugs, contributes to a generally encouraging picture, though the Government are under no illus- ions about the size of the problem and the length

of the road still to be travelled.

CONFIDENTIAL

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