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balanced budgets without resort to stop and go tactics. We have also maintained and even strengthened major programmes.
7.
-
The broad outcome has been as follows. In 1982-83 the
deficit was $3.5 billion (and we were fortunate that it was not greater). In 1983-84 it was $3 billion. For this financial year 1984-85 it will be about $1.8 billion conservatively excluding the successful $1 billion bond issue. If my various proposals are accepted by this Council, the planned deficit for 1985-86 should be about $1 billion. It could be less. Only a fool would make promises, but I hope to present to this Council in February 1986 a balanced budget for
budget for 1986-87. This is
is my present intention.
8.
The linking of the Hong Kong dollar to the US dollar in October 1983 has resulted in currency stabilisation (including built-in control of the money supply) and a return of confidence
in the HK dollar. Even better than forecast, there has also
been a rapid drop from 12.4% to 4.6% in consumer price inflation
(1). This is а most beneficial outcome and one of great importance for community well-being. People no longer fear alarming annual increases in the cost of living, particularly as real wages are again rising. They can absorb the slightly
inflationary impact of further selective indirect taxation.
Moreover, large annual inflation-based pay increases are
unnecessary. I forecast inflation of about 5.5% for 1985 as
compared with 8.1% for 1984. This is still high but a significant improvement. The future will be strongly influenced
by what happens in the USA.
9.
As for the public finances, growth in recurrent expenditure in particular has been held down. Considerable new revenue has also been found in a manner which has clearly not stilted economic recovery. In fact real GDP growth in 1984 was a remarkable 9.6%, while there has been effective full
(1) See paragraph 25.
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