| Share
of Public Expenditure in the Economy
|
| 52. The share of public
expenditure3
in the economy4
averaged around 16% in the mid-1980s, about 17% in the mid-1990s, but rose
to 22% in 2001-02. This is
due to the fact that, in the face of economic downturn since 1998, the
Government has consciously adopted a counter-cyclical fiscal policy, by
keeping expenditure growth above the trend growth of the economy.
In addition, due to rigidity in the prices of public expenditure,
they have continued to rise despite deflation in the economy.
3 Public expenditure comprises government expenditure and expenditure by the Trading Funds, the Housing Authority and payments from the Lotteries Fund. Government expenditure accounts for the majority of public expenditure. In 2001-02, for example, government expenditure accounts for about 88% of public expenditure. 4 The share of public expenditure in the economy is expressed as a percentage of GDP.
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| 53.
The growing share of
public expenditure in the economy consumes scarce resources that could
otherwise be used by the private sector more efficiently.
To maintain Hong Kong's competitiveness, we must contain public
expenditure as a percentage of GDP. My
target is to reduce this share to 20% of GDP or below by 2006-07.
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