TNAG-1729-FCO40-2442-Minutes-and-Hansards-of-the-Legislative-Council-of-Hong-Kong-1988 — Page 161

FINANCIAL

SECRETARY:

Sir

I have at times

to

the

stressed that my approach budget is to

to view it as a continuous process, and SO I have

already commenced planning for next year. Many of the comments made by Members in this debate will help me in my thinking, even though I may not be able to respond to all those comments today.

2.

In the course of this speech I shall, as usual, be updating some of the economic and financial background to my budget proposals in the light of recent developments. Where things have changed, I will

changed, I will comment.on the likely impact on my planning for the future.

THE ECONOMY

جو لکھا

First, the economy.

A number of Members have warned

of the risk of rising inflation and its inherent dangers.

Miss Dunn warned that both the inflation forecast for 1988-89 of

ent 7 and 78

the inflation assumption underlying the Medium Range

5.5. Forecast of might be too low. Other Members including Mr.

Kim Cham, Mr. Edward Ho, Mr. David Li and Mr. Poon Chi-fai warned that the current tight labour market and, in particular, the

pressure that will be put on it by the planned expansion in the

civil service will contribute to inflation.

三

کھتا ہے ہو

I share some of their fears in the light of the

current uncertainty about the prospects for the world economy,

and the recent tendency for prices to edge up. In putting

together my Budget package, I was aware of the risk that increased spending and reduced taxation could provide an

undesirable stimulus to the economy given that

it was already

operating close to its capacity limits. I took the view,

however, that because the overall growth rate of the economy was expected to slow down, the limited degree of stimulus involved

in the package presented was tolerable.

3

/5.