Public Finances
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| 2002-03 Outturn |
56. I have already mentioned that our forecast fiscal deficit in 2002-03 will be $70 billion. Total government spending will be $243.3 billion, whereas government revenue will be $173.3 billion. I forecast that our fiscal reserves will drop to $303 billion by 31 March this year.
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The Targets and Pace for Eliminating the Deficit
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57. Last year, I set three medium term targets for our public finances, which are to achieve the following by 2006-07:
- attain a balanced Operating Account;
- restore balance in the Consolidated Account; and
- reduce public expenditure 4 to 20% of GDP or below.
I remain convinced that these three targets are in the overall interest of Hong Kong.
4 Public expenditure comprises government expenditure and expenditure by the Trading Funds and the Housing Authority. Government expenditure accounts for the majority of public expenditure.
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58. To remove the uncertainty caused by the fiscal deficit and to restore investors?confidence, specific proposals must be made and carried out as soon as possible in order to demonstrate our determination. In view of the current economic environment in Hong Kong, we also need to avoid aggravating the problem of deflation and dampening consumer sentiment. In order to strike a balance, I will adopt clear targets, a practicable pace and a step-by-step approach to
implementation in proposing revenue-raising and expenditure-cutting measures.
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59. We estimate that between now and 2006-07 economic growth will bring the Government about $30 billion in additional revenue. To achieve fiscal balance by 2006-07, we aim to generate a further $20 billion through raising revenue and another $20 billion through cutting down on expenditure in the next four years.
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