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Following is the transcript of remarks by Chief Executive Tung Chee Hwa on the Budget Speech at a meet-the-media session held in Beijing this (March 5) afternoon:

Reporter: Tax increases is ...... , fees going up, the people of HK whether they like it or not they will have an extra financial burden. It's a very difficult time. Why is that necessary? Why do you think that would help?

CE: As I have just said a moment ago, that to revitalize our economy is the wish of all of our people, certainly the priority of this government, and certainly my priority going forward. That is number one. Why is this so important? It is because revitalizing the economy increases government intake, puts less pressure on the need for the tax increases. Let me tell you also this, to answer your question specifically. If we don't solve the budget deficit problem, we are not going to get the revitalization of our economy. If the international financial community, all the local community, have no confidence in our ability to deal with financial deficit or budget deficit, you know what would happen? The financial market may begin to move a lot more than we wish and eventually it will be under a lot of pressure. As soon as the interest rate goes up it is going to affect the recovery of our economy and when interest rate goes up, if you have a mortgage with the bank, you have to pay more by the way. So these are the issues we are concerned with. We are doing this for the fundamental interest of all the people of Hong Kong but I was just asking, do you know that in the Financial Secretary's budget speech today, he announced the fourth quarter GDP figures. The fourth quarter GDP grew at 5% after a 3.3% growth in the third quarter. Yes, there are early days. But these are remarkable numbers. What does it mean? It means that we are moving in the right direction. Economies slowly, slowly, coming back. Yes, there are lots of uncertainties in the external environment. We all know about that. But we are moving at the right direction. We are resolutely moving at that direction, and hopefully the key is to get the economy moving again. Thank you very much.

(Please also refer to the Chinese portion of the transcript.)

End/Wednesday, March 5, 2003.

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