ENG-1981 — Page 72

FINANCIAL SYSTEM AND ECONOMY

43

Personal Emoluments, $7,248 million for Annually Recurrent Other Charges, $7,882 million for Special Expenditure and $3,792 million for Public Works Non-recurrent. A further breakdown of expenditure is given in Appendix 9.

Consolidated Account

By respective resolutions over the years, the Legislative Council has created the Develop- ment Loan Fund, the Lotteries Fund, the Home Ownership Fund and the Student Loan Fund. The Development Loan Fund, created in 1958 and financed mainly by transfers from the government's general revenue, interest payments and capital repayments, totalled $4,952 million on March 31, 1981. This fund is used to finance social and economic developments, with the greater part applied to low-cost housing schemes. At March 31, 1981, liquid assets of the fund totalled $1,104.4 million while approved outstanding commitments amounted to $5,811.1 million.

The Lotteries Fund, established in 1965, in mainly used to finance the development of social welfare services. This is done through grants and loans. The fund started with a transfer from general revenue of $7.4 million and has since been credited with an additional $264.3 million through the net proceeds of the former Government Lottery and, from September, 1975, the Mark Six Lottery and the auction of special vehicle registration numbers. At March 31, 1981, the fund's liquid assets totalled $134.8 million and grants and loans amounting to $232.2 million had been approved.

The Home Ownership Fund was established in 1977 to finance the construction of flats for sale to the public, under a scheme designed to promote home ownership among families at a special income level. Up to March 31, 1981, a total of $1,066.5 million had been transferred to the fund from general revenue to meet land premia, building construction costs and other charges. During the year, a total of $935.6 million was spent on various projects while receipts from the sale of flats amounted to $1,094.6 million.

The Student Loan Fund, established on February 1, 1980, is used to finance loans to students of the two universities, the Hong Kong Polytechnic and other approved post- secondary institutions. During the year, two new schemes were approved to finance loans to Hong Kong students studying in the United Kingdom but no payments were made. Outstanding loans previously issued from the Development Loan Fund were transferred to this fund on February 1, 1980. At March 31, 1981, the fund's liquid assets totalled $23.8 million and loans amounting to $46.8 million were paid during the year.

Surplus and Deficit

A small deficit in the government's accounts was returned in the first financial year after World War II. Subsequently - with the exception of 1959-60, 1965-6 and 1974–5 when there were deficits of some $45 million, $137 million and $380 million, respectively - a succession of surpluses has accumulated over the years up to and including 1980-1. On March 31, 1981, accumulated reserves stood at $16,036 million. Such reserves are required to secure the government's contingent liabilities and to ensure that the government is able to cope with short-term tendencies for expenditure to exceed revenue or for revenue yields to fall below expectations.

Revenue and expenditure for 1979-80 and 1980-1, together with the estimates for 1981-2, are detailed and compared in Appendices 7 and 8. Sources of revenue and expenditure in various fields are shown proportionately by charts in Appendices 7a and 8a. For 1981-2 the estimated revenue of $32,888 million and gross expenditure of $25,062 million forecast an estimated surplus of $7,826 million for the year.