Appendix A---Contd.
23 Table 5 indicates the relationship between Consolidated Account expenditure and Public Sector expenditure. The former has historically been used as a measure for control of Government's finances. On the other, Public Sector expenditure is an economic definition used in the context of national accounts for GDP estimation. It excludes, for instance, government transfers and current expenditure of government "trading" departments. Since the two series of statistics have different components, they may move differently and Table 5 brings out the extent of this difference in movement.
Relationship Between Consolidated Account Expenditure and Public Sector Expenditure as Defined for GDP Purposes
Table 5
Revised Estimate
Forecast
1987-88
1988-89
1989-90
1990-91
1991-92
Smn
Smn
Smn
Smn
Smn
Total Consolidated Account expenditure (from Table 4) Add: Imputed rent (Note 1) and expenditure by other public sector bodies not included in total Consolidated Account expenditure (Note 2)
54,080
62,590
70,750
77,940
86,710
5,680
6,440
6,380
7,120
8,570
Less: Transfers
recurrent and capital subventions (Note 3)
(11,010)
(13,200)
(14,830)
(17,000)
(19,760)
other transfer payments made by Government (Note 4)
( 5,480)
( 6,890)
( 8,040)
( 8,280)
( 8,420)
Current expenditure of government “trading"
departments (Note 5)
(6,300)
(6,900)
( 7,630)
( 8,470)
(9,400)
Total Public Sector expenditure in national accounts terms (Note 6)
36,970
42,040
46,630
51,310
57,700
Growth in Public Sector expenditure
Money terms
14.5%
13.7%
10.9%
10.0%
12.5%
Real terms
5.4%
5.1%
4.4%
3.1%
5.4%
Gross Domestic Product (calendar year) (Note 7)
360.200
400,900
446,200
496,600
$52,700
Growth in GDP
Money terms
20.1%
11.3%
11.3%
11.3%
11.3%
Real terms
13.6%
5.5%
5.5%
5.5%
5.5%
Public Sector expenditure as a percentage of GDP (at current prices)
(Note 8)
10.3%
10.5%
10.5%
10.3%
10.4%
Note 1 An estimate of the notional rent of premises owned by the Government and occupied by the non-trading government departments. Note 2 Capital expenditure by the Mass Transit Railway Corporation and the Kowloon-Canton Railway Corporation and current and capital expenditure by other public organizations such as the Vocational Training Council, Trade Development Council, Hong Kong Productivity Centre, Hong Kong Tourist Association and Consumer Council, etc.
Note 3 Financial assistance to government-assisted institutions in the private or quasi-private sector.
Note 4 Expenditure on land acquisitions, compensations, purchases of properties, welfare payments, grants and loans etc. Note 5 Government trading departments are distinguished from other government departments in that they are engaged in the production of goods and services principally for sale to the public. The criteria for distinguishing the trading activities of the Government from its other activities are:
(i) that the activity consists of the production of goods and services of a kind which might be provided by a private business; and (ii) that sales, either to the public or to other government departments, account for a major part of their activities. Some examples of
departments regarded as being engaged in trading activities are Civil Aviation, Housing, Post Office and Water Supplies. Note 6 Total Public Sector expenditure and its growth rates in this table are calculated on a fiscal year basis. These may, therefore, be
different from those calculated on a calendar year basis and quoted elsewhere in the Budget Speech.
Note 7 The GDP growth rates for the years 1988 to 1991 (and the GDP figures thus derived) are the trend projections used for medium-range budgetary planning purposes. Fluctuations in economic activity from year to year are not taken into account. In particular, the trend figure for the GDP in 1988 differs slightly from the short-term GDP forecast quoted elsewhere in the Budget Speech.
Note 8 Caution should be exercised in interpreting these percentages as the Public Sector expenditure is estimated on a fiscal year basis while
the GDP is estimated on a calendar year basis.
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