TNAG-1641-FCO40-2288-Budget-of-Hong-Kong-1987 — Page 168

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11.2.87

STRATEGY FOR PUBLIC FINANCES

33.

Before I present my budget proposals for

1987-88, I shall describe the context in which they have

been framed. My proposals should not be looked at in

isolation. They must be related to what has happened in

the past and what is foreseen for the future. A strategy

for the medium term is essential to the stability of

Government's finances and the steady development of the

economy.

34.

I shall give details later to show the strength

of our underlying position. Briefly, however, our

expenditure remains firmly under control and is in line

with forecast. On the other hand, revenue yields have

increased substantially in response to an improvement in

economic performance. As a result, we can now expect in

the current financial year a surplus on General Revenue

Account of some $3 billion. Furthermore, although partly

due to revenue of a windfall nature, the balances in our

Capital Funds have gained by some $1.9 billion.

35.

Most of the improvement in revenue comes from

tax sources that are recurrent in nature. I am able,

therefore, to plan on the basis that they represent a

genuine gain to our revenue base, which will be sustained

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