TNAG-1725-FCO40-2438-Minutes-and-Hansards-of-the-Legislative-Council-of-Hong-Kong-1988 — Page 28

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FATE TE PA TATIZO NA HANYA SASISTATATATATATATATATATATATATANONGOONAMENTOZANA NA PAPAJANJA PAJARKAN KEM

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The Medium Range Forecast

31.

Sir, Members will by now be familiar with the Medium Range Forecast, which we use to formulate our budgetary

strategy. The forecast for the period up to 1991-92 is shown in an Appendix to the printed version of this speech and I commend it as a document for careful study (16). Because it forms the

basis for

I shall my specific budget proposals for 1988-89, highlight some of the more important features of this forecast.

32.

First, while both performance and projections of

government expenditure remain close to previous forecasts, revenue is running well ahead of earlier expectations. Two years of rapid economic growth have lifted tax yields to a

higher base. If no further fiscal measures were taken, our average surplus over the forecast period up to 1991-92 would run at about $5.9 billion a year.

33.

Secondly, this level of surplus is well in excess of the $2 billion or so that we need each year just to maintain the

real value of our reserves. It reflects the underlying strength

of our position and gives us some

some room for manoeuvre.

34.

And thirdly, government expenditure in Consolidated Account terms as a proportion of GDP is forecast to remain slightly below the 168 mark, around which it has been maintained Our aim of not crowding out the private sector

in recent years.

per cent

with public sector demand is being achieved.

This is

particularly important at a time when our economy is already running up against capacity constraints.

(16) Appendix A.

18

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