Three Targets Set for Public Finances in 2006-07: Leung

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Last updated at: (Beijing Time) Wednesday, March 06, 2002

Three Targets Set for Public Finances in 2006-07: Leung

Financial Secretary of the Hong Kong SAR government Antony Leung said in his budget speech delivered Wednesday that he had set three targets for public finances in 2006-07.

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Financial Secretary of the Hong Kong SAR government Antony Leung said in his budget speech delivered Wednesday that he had set three targets for public finances in 2006-07.

The three targets are to restore balance in the Consolidated Account; to attain a balanced Operating Account; and to reduce public expenditure to 20 percent of the GDP or below.

"I aim to achieve these targets step by step through reducing the growth of government expenditure and modestly raising revenue. I believe this is a practical strategy commensurate with our economic condition," the financial secretary said.

Leung forecast a consolidated deficit of 65.6 billion HK dollars (8.41 billion U.S. dollars) for 2001-02 (equivalent to 5.2 percent of the GDP), far larger than the original estimate of 3 billion HK dollars.

This is due mainly to revenues from land premiums and investment income from the fiscal reserves falling far short of the original forecasts, he said.

Furthermore, the secondary offering of Mass Transit Railway shares originally planned for this financial year has been postponed to the next because of changes in investment market conditions, he added.

Leung estimated the fiscal reserves to be 369.8 billion HK dollars (47.4 billion U.S. dollars) by March 31 this year, roughly equivalent to 19 months of government expenditure.

He stressed that there are no further need to link the level of fiscal reserves to money supply. "In my view, it should be sufficient to have fiscal reserves equivalent to around 12 months of government expenditure to meet operating and contingency requirements," he said.

The government's fiscal reserves will continue to be placed with the Exchange Fund, thereby providing even more resources for the Exchange Fund to maintain the stability of the Hong Kong Dollar and our monetary system, he added.

Regarding to the government expenditure, Leung announced he will reduce the real growth in government expenditure to an average of 1.5 percent each year from 2003-04 to 2006-07, lower than the forecast economic growth rate.

"I believe Hong Kong's economy should have picked up by then and such a reduction will be necessary to restore fiscal balance in the medium term," he said.

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