TNAG-0761-FCO40-965-Budget-of-Hong-Kong--1978-1979-1978 — Page 73

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expenditure in the ensuing year; but this is comforting as I am already rather fearful about the rate at which

recurrent expenditure is now growing. And it will continue to grow unabated in the forecast years 1979-80 to 1981-82 (which will certainly be years of economic uncertainty and possibly years of growing political doubts), since we have taken on open-ended commitments

in certain areas.

1978-79 Draft Estimates

(a) Overall

The Draft Estimates may now be summarised as

7.

follows:

Revenue:

Recurrent

Capital

Expenditure:

Recurrent

Capital

Surplus on recurrent account

Deficit on capital account

.. Difference is now an

overall surplus of

$mn

$mn

9,130(+13)

1,236(+6.5)

10,366(+12)

7,323(+17)

2,943(+54)

10,266(+26)

+1,807

-1,707

+ 100

8.

Note: Figures in brackets are the percentage

changes on the revised estimates

for 1977-78 shown in paragraph 3 above.

I cannot yet evaluate these figures in terms of the relative size of the public sector (the G.D.P.

forecast for 1978 will not be finished for another few

days, but it may be 9% in real terms and 16% in money terms)* or the load on the construction industry

* A quick calculation indicates that the ratio of public expenditure (Consolidated Account) to G.D.P. after falling from 18.8% in the recession year 1974-75 to an average of 16.6% in the two upswing years 1975-76 and 1976-77 rose to 17.7% in the later recovery year 1977-78 and will rise further to 18.4% in 1978–79.

S