Tung Chee-hwa's pledge to build more homes will leave the Housing Authority $4 billion poorer by the end of the next financial year.
In its budget released yesterday, the authority expects to finish the 1998-99 financial year with reserves of $27.1 billion, down from $31.1 billion for 1997-98.
To cope with a 60 per cent increase in construction of Public Rental Housing and Home Ownership Scheme flats, capital expenditure will be increased by 45 per cent, to $25.7 billion.
More than 150,000 flats are expected to be built during the next financial year, up from 95,000 during 1997-98 and bringing the number of rental flats to 670,000.
Finance Committee director Roger Avon said the ambitious construction programme meant capital expenditure would continue to rise until the 'peak of construction' in 2000.
He said construction should then drop back, with an average of 50,000 rental flats being built each year.
'A deficit means there is not sufficient working capital . . . it's a minor change in cash or funds,' he said.
