***************

The following is the full text of the summary on the 2002-03 Budget Speech delivered by the Financial Secretary, Mr Antony Leung, today (March 6):

Ladies and Gentlemen,

Earlier today, I presented my first Budget to the Legislative Council.

The Budget identifies the directions for our economic development in the medium term. It sets out various measures to redress our fiscal deficits by 2006-07. It adopts a counter-cyclical fiscal policy for 2002-03. It also recommends a package of immediate relief measures to the community at large at this time of economic difficulty.

On the economic front, Hong Kong is affected by economic restructuring and other external factors. However, we do not need to be overly pessimistic. Hong Kong has many fundamental advantages, including geographic location, institutional strengths, talent and strong business base. These competitive advantages have been gained over time and are unparalleled in the region. Hong Kong commands a leading position in sectors such as financial services, logistics, tourism, producer and professional services and in many others.

As we move ahead, our businesses must move up the value chain and must compete on product differentiation. Quality, speed and creativity are the keys to success. These attributes are essential for both high- and low-technology businesses. So long as we all strive for progress in this direction, we will overcome the challenges of economic restructuring and benefit from the fast growing economy of our motherland.

On public finances, I have set three targets to be achieved by 2006-07:

* restore balance in the Consolidated Account;

* attain a balanced Operating Account; and

* reduce public expenditure to 20% of GDP or below.

To achieve these targets, I aim in the next five years to reduce the growth of government expenditure to below that of the economy. The Government needs to simplify its structure, to streamline its procedures and to economise on manpower. That way, resources can be released to meet the demand for new services. However, in the light of the current economic situation and in order to implement the Chief Executive's vision for Hong Kong, government expenditure will maintain a modest growth in the coming financial year. This will meet our Education, Health and Social Welfare needs. Moreover, in the Expenditure Estimates, I have assumed that civil service pay and personnel-related expenses for subvented organisations are to be reduced by 4.75%. I understand that many of my colleagues in the civil service are willing to stand by the rest of the community in this time of difficulty and share the burden.

The Chief Executive and I have said that we will not introduce any sales tax in a time of economic downturn. So I have made no major changes on the revenue front. I have proposed only a modest increase in revenue from duty on wine and tobacco. I also plan to introduce a Boundary Facilities Improvement Tax in 2003-04 to help finance the improvement of boundary facilities so as to ease the flow of people to and from the Mainland. I will consider other options for raising additional revenue or further containing expenditure growth in future. I am confident that by 2006-07, I will be able to restore fiscal balance and contain public expenditure to 20% of GDP or below.

The Chief Executive and I are fully aware of the current difficulties that the community faces. I have therefore decided to implement a package of one-off concessions to relieve the hardship of citizens and businesses. This includes reduction in rates, water and sewage charges, Business Registration fees and the trade effluent surcharge. I will also extend the duty concession for ultra low sulphur diesel and freeze most Government fees and charges for another year. The total cost of these concessions will amount to 6.4 billion dollars.

I have also decided to allocate an extra one-off sum of 400 million dollars to implement a youth employment initiative in the coming two years to assist our youth to raise their employment prospects.

Citizens of Hong Kong, let us all with one heart and one mind forge ahead and achieve the bright future that awaits within our reach.

End/Wednesday, March 6, 2002

NNNN