CONFIDENTIAL
key airport projects, it is important to keep
in perspective. In the coming years. we have made provision in our forward plan- ning for continuing high level of investment in programmes in other major areas such as port development, education, the environ-
ment, water supply, new town development,
health and rehabilitation, and transport.
Capital expenditure in these areas, together
with resources allowed for land acquisition, major systems and equipments used by the
Government are estimated to amount to a
massive $140 billion (at present day prices)
in the period up to 1997, an average of
about $21 billion each year.
HONG KONG GOVERNMENT'S
FISCAL POSITION
12.
Clearly the construction of the new airport and the related transport infra- structure involves a very substantial financial
commitment. But a fact worth stressing is
that investment in the airport programme is
investment in Hong Kong's future. When completed, the airport and related facilities will bring to Hong Kong long-term economic
and financial benefits far greater than the
cost of the investment, and these benefits
will be enjoyed well into the next century. Conversely, not to proceed with these proj-
ects would seriously handicap the develop-
ment of the Hong Kong economy and ad-
versely affect the well-being of its people.
13.
The key factor enabling the
Government to decide to proceed with the
airport programme was and is Hong Kong's financial strength. At the end of the last
financial year, our fiscal reserves stood at
$72.5 billion. This figure does not include
the $17 billion (excluding interest) trans.
ferred to the SAR Government I and Fund
up to the end of 1989-90. While this Fund will not be part of the reserves until July
1997, it consists of income from land sale
premia which previously would have gone
into the reserves. These figures comnare
with reserves of only $24 billion in 1983
when a decision not to proceed with a new
airport was taken and when the SAR Gov-
ernment Land Fund had not yet come into
existence.
14.
The Land Fund is clearly of
relevance when assessing the long-term
strength of Hong Kong's finances, and
particularly the strength of the financial
situation which the SAR Government will
inherit on its establishment in 1997. On the
basis of fairly conservative assumptions
about future land sales and interest, we
estimate that the Land Fund will have o
balance of over $70 billion (at present day prices) by March 1997.
CONFIDENTIAL
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