TNAG-0761-FCO40-965-Budget-of-Hong-Kong--1978-1979-1978 — Page 74

or the real growth rate of public expenditure (let alone in terms of their monetary impact).

In money

terms, they provide for an increase in expenditure on

the revised estimates for 1977-78 of 26%, which is

much higher than my 18th November guess of 19% (but note

that the huge increase in capital expenditure includes transfers of $400 million to the D.L.F. for on-lending to the Housing Authority, and $400 million to the Home Ownership Fund, and I do not believe that all of this

will be actually required/spent, but a 4 5% salaries revision could cost us upwards of $175 million).

(b) Budget Guidelines

-

9. But I can say that the structure of the budget now closely follows our budget guidelines despite the fact that recurrent expenditure is growing so fast (though whether the present quite buoyant growth rate of recurrent revenue will last forever

is another matter. Fortunately, also, capital revenue will finance 40% of capital expenditure), viz:

1977-78(1)

(1) Recurrent revenue Total expenditure

Recurrent revenue

(2) Recurrent expenditure

(3) Surplus on recurrent acet Total expenditure

(4) Recurrent expenditure Total expenditure

(5) Capital revenue

Capital expenditure

Note:

$mn

% Guideline

9,130

10,266

88.9 At least 88%

98.9

7,323 9,130

= 80.2 No more than 80% 77.4

1,807

www

= 61.4 At least 60%

95.5

2,943

7.323 10.266

1.236 2,943

= 71.3 No more than 70% 76.6

= 42.0 At least 20%

60.7

(1) Based on the revised estimates in paragraph 3 above.

10.

In terms of our guidelines, the likely outturn figures for the current year are also most satisfactory. However, whilst recurrent expenditure will absorb less

SECRET

/than..

•