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Investment Income of the Fiscal Reserves

79.       The investment income of the fiscal reserves is another important source of revenue for the Government, yet it is extremely volatile.  It has represented between 0.5 per cent and 18 per cent of government revenue over the past decade.  Meanwhile, we have noted calls from the community for higher returns from the fiscal reserves.  After careful consideration and with a view to increasing the Government's investment income and enhancing its stability, I have decided to revise the income-sharing arrangement between the fiscal reserves and the Exchange Fund, subject to the principle that the Fund's ability to defend our currency and stabilise our monetary and financial systems should not be undermined.


80.       Effective from 1 April, the return on the fiscal reserves will be calculated on the basis of the average rate of return of the Exchange Fund's investment portfolio over the past six years.  Under the new arrangement, the rate of return on the fiscal reserves for 2007 will be 7 per cent.  I will also include the guarantee of a minimum return so as to ensure that the annual investment return in any year will not be lower than the average yield of three-year Exchange Fund Notes for the previous year.



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2006 | Important notices

Last revision date : 28 February, 2007