TNAG-2470-FCO40-3594-Budget-of-Hong-Kong-1992 — Page 77

$Million

25.000

Comparison of Capital Works Expenditure with Guideline (at 1991-92 price levels)

20,000-

18,990

15,000

10,000

14,900

20.410

16.310

21.840

21,930

Guideline

Actual

Guideline

Revised Estimates

Guideline Estimates

1990-91

1991-92

1992-93

Year

68.

However, the Medium Range Forecast made it clear that our revenue in future years would not be sufficient to meet expenditure. Even after the revenue measures I will be proposing shortly, cash deficits will emerge after 1992-93. However, the end result will be that we shall have the reserves we need in 1996-97.

69.

In addressing the need to have adequate reserves, I have been conscious that the earlier we take the measures required to augment our reserves, the greater the cumulative effect and the greater our capacity to cope with unforeseen adverse developments.

70. My package of revenue measures will generate net additional revenue of $1.1 billion, bringing the total estimated surplus for 1992-93 to $5.1 billion, excluding borrowings. Our forecasts indicate that after taking the additional revenue into account, the reserves will stand at $71.6 billion at the end of March 1997, including borrowings of $4.8 billion. This will allow us to meet our commitments under the Memorandum of Understanding while maintaining a reasonable cushion against the contingencies of the next five years. It will have the additional subsidiary advantage that this evidence of our continuing financial strength and prudence should do much to reassure potential lenders at a time when we shall be financing our infrastructural development.

71.

Moreover, Hong Kong's finances in 1997 will benefit from the Hong Kong Special Administrative Region Government Land Fund. This receives and manages the share of land sale revenue which is set aside for the future SAR government. This fund is not included in the accounts of the Hong Kong Government but will become part of the new administration's fiscal reserves in 1997. At the end of March 1991, the land revenue transferred to the fund totalled $20.3 billion. The forecast is that it will receive a further $7.4 billion for 1991-92 and $8 billion in 1992-93. If these forecasts are achieved, the fund will have received $35.7 billion by the end of March 1993, excluding interest earned.

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