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Fiscal Reserves

103.    We expect that our fiscal reserves will be maintained over the next five years in a range between $150 billion and $220 billion, the equivalent of seven to 10 months of government expenditure.

104.    During the Budget consultation, some people suggested that we should transfer part of the investment income of the Exchange Fund to the general revenue to ease the deficit problem. As Financial Secretary, I agree that the Government should leave wealth with the people. However, I must also take into account the need to maintain the stability of our currency. In view of the extremely volatile and unpredictable international monetary environment, we must maintain abundant foreign reserves to preserve local and overseas confidence in the Hong Kong dollar. Moreover, the investment return of the Exchange Fund can fluctuate and is by no means a steady source of income. Last year was a good example of this. We did not anticipate that the Exchange Fund's return would be so high. In accordance with the principle of prudent financial management, the Government cannot rely excessively on such an unstable source of revenue. I will review the situation from time to time so as to strike a proper balance between leaving wealth with the people and maintaining a stable currency.

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