Budget Sets Correct Priorities for HK Public Finances

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Last updated at: (Beijing Time) Thursday, March 07, 2002

Budget Sets Correct Priorities for HK Public Finances

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A group of world's leading financial institutions here believed that the budget presented by Financial Secretary Antony Leung on Wednesday sets correct priorities for Hong Kong's public finances in future.

Describing the budget as a "sound" one, the Hong Kong-based Deloitte Touche Tohmatsu (DTT), one of the world's leading professional services organizations, said the budget combines a sensible proposal to cap government expenditure with concrete actions to revive the economy and local business.

"The budget indicates that the government is heading in the right direction and Mr. Leung has demonstrated a willingness to revive the local economy through effective measures," said Yvonne Law, DTT's national chief knowledge officer and senior tax partner.

Law said the stated aim of capping public expenditure at 20 percent of GDP, combined with greater clarity concerning the government's economic role, projects a clear vision for Hong Kong's future development.

A report released by Kevin Lai, national economist of the Australian Chamber of Commerce (AustCham) in Hong Kong, said that the budget strikes a good balance between restoring the growth and fiscal balance.

Lai believed that restoring fiscal balance too quickly and too aggressively could easily derail growth recovery which is at this stage still fragile and uncertain. "The government seems to understand that the structural deficit problem is one of perennial overspending, therefore the budget now offers a more concrete plan to curb government spending growth over the next 5 years," he said.

Commenting on the proposal of cutting of civil servant pay, Lai said the proposal to reduce civil servant and subvention group salaries is a move in the right direction. "We think there is

still room to pursue at this end," the economist said.

The British Chamber of Commerce in Hong Kong also spoke highly of the proposal to balance the budget deficit within a clearly defined period of time.

"We welcome the fact that the SAR Government has shown leadership to the rest of the community in reducing costs and enhancing competitiveness by proposing the introduction of pay adjustment for the civil service," the chamber of commerce said in a statement.

"We also welcome the palliative measures that the Financial Secretary has taken to ease the burden on the community as a whole... ," the chamber said.

While putting a positive spin on the budget, economists here also noted that there is a need to not only sight land but to set a course to make a safe landfall.

DTT's Law said that the success of this budget depends heavily on the government's ability to achieve greater efficiency throughout all departments. "This will be quite an undertaking over the next few years," he pointed out.

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