Convenor warns of budget deficit
Executive Council convenor Chung Sze-yuen yesterday warned of a deficit in the current Budget in the face of falling proceeds from land sales and advance spending on infrastructure projects.
He said the projected premium from land sales in the 1998-99 Budget was based on market values when the Budget was drawn up.
'We all know with property prices falling, the price of land will fall, too, and as a result, income will be smaller.' Financial Secretary Donald Tsang Yam-kuen has estimated a modest surplus of $10.7 billion in this Budget.
Asked whether the Government should formulate a deficit Budget next year, Mr Chung said it was too early to draw any conclusion.
'We have no idea what the situation will be in nine months' time.' he said.
But he admitted it would depend on land revenue for the present year.
Mr Tsang said yesterday that any discussion on whether there should be a deficit Budget should not deviate from the prime aim to improve livelihoods and revive the economy.
'A deficit Budget is just one of the means to draw up a Budget. It's not the end itself . . . a deficit Budget in one year will not cure all the problems. The most important thing is to improve our business environment.
'[We should also] maintain our prudent fiscal management so investors continue to invest in Hong Kong. This will increase employment.' He said it was premature to say whether there should be a deficit Budget next year.
Mr Tsang said he hoped party political views on the Budget would be compiled at the end of June for Tung Chee-hwa's consideration in his second Policy Address.
Hong Kong Progressive Alliance chairman Ambrose Lau Hon-chuen said the Basic Law did not rule out a deficit Budget.
'But the Financial Secretary should prove to us a deficit Budget is made to maintain basic public expenditure and to boost the economy.'