TNAG-0761-FCO40-965-Budget-of-Hong-Kong--1978-1979-1978 — Page 52

B. THE IMPORTANCE OF ACHIEVING A GROWTH RATE IN REAL TERMS SO AS

TO BRING THE AVERAGE GROWTH RATE UP TO A 10 PERCENT PER ANNUM STEADY PROGRESSION. (THUS THE INCREASE IN GENERAL REVENUE ACCOUNT EXPENDITURE BUDGETTED FOR IN 1978-79 WILL, IN REAL TERMS, BRING THE GROWTH RATE OVER THE FIVE YEARS 1974-75 TO 1978-79 VIRTUALLY UP TO THE 10 PERCENT PER ANNUM STEADY PROGRESSION GUIDELINE): C. THE STATE OF OUR FISCAL RESERVES: ON THE BASIS OF A GEARING OF

THREE, AT LEAST DOLLARS 3,200 MILLION OF THE FISCAL RESERVES AT 1 APRIL 1978 (AMOUNTING TO AN ESTIMATED DOLLARS 4,290 MILLION)

WILL BE REQUIRED TO SECURE CONTINGENT LIABILITIES ESTIMATED AT DOLLARS 9,500 MILLION BY 31 MARCH 1982, SO LEAVING DOLLARS 1,690 MILLION FREE FOR SHORT-TERM DIFFICULTIES AND TO FINANCE SEASONAL DEFICITS, EQUIVALENT TO A SATISFACTORY 16.5 PERCENT OF ESTIMATED EXPENDIUTRE IN 1978-79:

D. THE DIFFERENT MONETARY CONSEQUENCES OF A PUBLIC SECTOR (CONSOL-

IDATED ACCOUNT) WHICH IS IN BALANCE, DEFICIT OR SURPLUS: ALTHOUGH THE ECONOMY IS NOW OPERATING AT OUR NEAR FULL CAPACITY, MONETARY CONSIDERATIONS DO NOT JUSTIFY BUDGETTING FOR A SURPLUS, THAT IS TO SAY, THE FINANCIAL SECRETARY TOOK THE VIEW THAT THERE

IS NO NEED NEXT YEAR FOR BUDGETARY POLICY TO EXERCIS E A DEFLATION

ARY INFLUENCE BY TRANSFERRING FUNDS FROM THE NON-BANK PRIVATE

SECTOR TO THE PUBLIC SECTOR:

E. THE GUIDELINES DEFINING THE DESIRABLE RELATIONSHIP

BETWEEN RECURRENT AND CAPITAL EXPENDITURE, AND BETWEEN RECURRENT REVENUE AND THE FINANCING OF THE CAPITAL ACCOUNT. (THUS DESPITE

ITS FAST GROWTH, RECURRENT EXPENDITURE IS ONLY SLIGHTLY IN EXCESS OF THE GUIDELING OF 70 PERCENT, AND THE SURPLUS ON RECURRENT ACCOUNT WILL FINANCE 61.4 PERCENT OF CAPITAL EXPENDITURE COMPARED

WITH THE GUIDELINE OF AT LEAST 60 PERCENT):

F. THE ABSOLUTE LEVELS OF THE VARIOUS COMPONENTS OF THE CAPITAL

ACCOUNT: AS THE PROVISION REQUIRED FOR THE TWO PUBLIC WORKS PROGRAMME COMPONENTS IS DOLLARS 2,008 MILLION, IT HAS BEEN

POSSIBLE TO INCREASE THE PROVISION FOR ALL OTHER CAPITAL EXPEND-

ITURE TO DOLLARS 935 MILLION WITHOUT SERIOUSLY INFLATING TOTAL

CAPITAL EXPENDITURE.

PART V : DRAFT EXPENDITURE ESTIMATES FOR 1978-79.

19. THE LEVEL OF EXPENDITURE IN 1978-79 PROVIDES FOR EXPANSION

IN ALL SERVICES, BUT THE MAIN AREAS OF EXPANSION ARE:

A. SOME DOLLARS 910 MILLION WILL BE SPENT ON PUBLIC HOUSING

AND ASSOCIATED COMMUNITY FACILITIES. NEW ACCOMMODATION WILL BE

COMPLETED FOR 127,800 PERSONS. ADDITIONALLY, DOLLARS 400 MILLION

5 -

/WILL BE