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Prudent Management of Public Finances, 
Achieving Fiscal Balance

55.      Despite this cautiously optimistic economic outlook, we still need to address the problem of the fiscal deficit. The health of our public finances has a major bearing on the stability of our monetary and financial systems, investor confidence and overall economic development. I am committed to upholding the important principles stipulated in the Basic Law to manage public finances prudently: keep expenditure within the limits of revenues and strive to achieve a fiscal balance. I am also committed to keeping a simple and low tax regime and maintaining the stability and integrity of the monetary system.

56.      After taking into account the impact of the SARS outbreak on the economy, I announced in this Council on 22 October last year our new target for achieving fiscal balance. The Government will control expenditure strictly and is determined to reduce its operating expenditure to $200 billion by 2008-09. We will also strive to restore fiscal balance in the Operating and Consolidated Accounts by 2008-09. Moreover, in line with the principle of "big market, small government", I have pledged to bring public expenditure down to 20 per cent of GDP or below.

57.      In preparing for my maiden Budget, I consulted members of the public, Members of this Council and representatives of various groups. A special Budget web-page was also set up to assist the public to express your views. Most of the feedback was pragmatic and constructive, and some also very innovative. I have listened carefully to all the views given. I understand that there is some public dissatisfaction with the Government and that some people are still experiencing the pain brought about by economic adjustment. In his Policy Address in January, the Chief Executive said that, while we would continue with economic restructuring and revival, we should allow the community to be given a respite. In this Budget, I am not going to make any major tax changes, so as to sustain the momentum of economic recovery. I will seek to strike a proper balance between reducing the fiscal deficit and safeguarding people's livelihood in a pragmatic and proactive manner.

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2003 | Important notices
Last revision date : 10 March, 2004