TNAG-2466-FCO40-3590-Economic-situation-in-Hong-Kong-1992 — Page 96

25-1AR-1993 15:05

INFORMATION SERVICES DEPT

- 352 310 F068 P.02

I

Full Translation of an Interview with Financial Secretary (Designate) Yamist MacLeod

in Ming Pao on May 15, 1991

Headlines: Financial Secretary (Designate) Hamish Macleod Says it's

note unworkable to Measure Expenditure Against Revenue; Government Expenditure is Not Entirely Without Control.

Financial Secretary (designate) Hamish Macleod did not expect that he would introduce major changes in the new Budget. He believed that his work in the future would be full of difficulties and challenges.

Mr Macleod, who is to take up office in August, said in an interview with the paper that he would have to face up to the inflation problem, which was a most worrying question among the public. ak's future economic growth would be lower than in the past. There would be other unresolved issues such as China's MFN status and the new airport project.

Mr Macleod said that control on Government spending and the growth of the civil service could reduce pressure on inflation. However, the Government might encounter pressure from another quarter, i.e. demands for increasing new services. This difficulty would grow because the sstimated growth of HK's economy would slow down. After Legco included directly elected members, councillors would be more active in asking for new services.

'On the other hand, it would not be easy to control the increase in the number of civil servants. As it was necessary to take into account the views and morale of civil servants, drastic changes and major cutbacks in certain areas would not be workable. It would be proper for the Government to determine spending in accordance with its economic growth.

Consideration should be given to the morale of civil servants

•

Although the Government had been criticised for budgetting public spending based on the trend of economic growth, which often led to overspending when the economy was weak, Mr Macleod said that such a method of budgetting would prevent too much fluctuations during budgetting. The GDP growth of the territory had been 13 per cent two years ago. It was only five per cent now. It would be impossible to budget on the basis of the rate of economic growth. Moreover, the Government always looked ahead for five years when preparing its Budget.