TNAG-0761-FCO40-965-Budget-of-Hong-Kong--1978-1979-1978 — Page 92

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increase in expenditure on the present projection

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 DLF for on-lending to the Housing

Authority, and $400 million to the Home Ownership Fund,

not all of which may actually be required/spent).

8.

(b) Budget Guidelines

But I can say that we shall be in quite serious breach

of our budget guidelines because recurrent expenditure is

growing so fast (fast even in relation to a quite buoyant

growth rate of recurrent revenue), viz:

Guideline

1977- 78 (1)

(1) Recurrent revenue Total expenditure

$8770M = 85.6% At least

97.1%

$10250M

88%

(2) Recurrent expenditure Recurrent revenue

$7330M

83.6%

No more

79.0%

$8770M

than 80%

(3) Surplus on recurrent

acct

$1440M 49.3% At least

87.4%

Capital expenditure

$2920M

60%

(4) Recurrent expenditure Total expenditure

$7330M

No more

= 71.5%

76.6%

$10250M

than 70%

(5) Capital revenue

Capital expenditure

$1160M $2920M

At least = 39.7%

63.2%

20%

9.

Note: (1) Based on the projections in paragraph 2 above.

However, for the moment these are acceptable in view

of the repeated buoyancy of capital revenue. The overall

deficit is caused by the disproportionate share of recurrent

revenue absorbed by recurrent expenditure (Guideline (2))

resulting

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