The surplus for the next financial year is forecast to be $10.7 billion, dramatically down from this year's $77 billion. For the three years to 2001-02, there will be a surplus of $70.8 billion. By the end of next month the reserves will be at $445.5 billion, growing to $527.13 billion by the end of March 2002. Mr Tsang said that with the uncertainties faced this year and the need to preserve the real value of the reserves, the surplus for the next financial year was prudent. 'We are sticking firmly to a prudent fiscal policy and this will be the hallmark of my Budget this year,' he said. 'The lowering in the proportion of reserves to expenditure reflects the difficult economic conditions.' For the current financial year, there was an exceptional surplus of $77 billion, $45.3 billion higher than last year's estimate. This was due to higher revenue from land premiums and stamp duty in the first half of the year. According to Mr Tsang, the discrepancy was due to extra revenue of $39.9 billion and underspending of $5.4 billion. The extra revenue included $16.2 billion of stamp duty on property and share transactions. Firmer interest rates and the increased surpluses for 1996-98 also brought in higher interest earnings. There were also slightly higher receipts from salaries and profits taxes. Land premiums were $16.8 billion higher than expected. This was due to more land being sold and the surge in property value in the first half of 1997. For expenditure, the revised estimate is $197.7 billion, with underspending of $5.4 billion attributed partly to slippage in capital projects. The various government funds' spending was $7.8 billion less than estimated, offset by overspending of $2.4 billion in the General Revenue Accounts. Mr Tsang said three sources had helped to build the reserves: retention of all land transaction proceeds; an increase in investment earnings; and the introduction of government rents for new or extended land leases.