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

The Government announced today (January 31) its financial results for the nine months ended December 31, 2004.

There was a surplus of $0.2 billion in December, thereby reducing the year-to-date deficit to $2.8 billion for the period April to December 2004. Expenditure for the period April to December 2004 amounted to $179 billion and revenue to $176.2 billion. The revenue for the period, and thus the deficit, have taken account of the $6 billion Toll Revenue Bond and $20 billion Government bonds and notes issued in May and July 2004 respectively.

A Government spokesman said that the surplus in December was mainly due to Profits Tax and Salaries Tax receipts. He added that an assessment of the likely result for the current financial year would be provided by the Financial Secretary in his Budget Speech on March 16, 2005.

The fiscal reserves stood at $272.6 billion at December 31, 2004.

More detailed figures are shown in Tables 1 and 2.

TABLE 1. CONSOLIDATED ACCOUNT

                                             Year to date 

                         Month ended         April 1, 2004 to

                         December 31, 2004   December 31, 2004

                         -----------------   -----------------

                            HK$ million         HK$ million

Revenue                       20,627.6           176,222.9

Expenditure                  (20,379.3)         (178,986.2)

                         ------------------   ----------------

Surplus/(Deficit)               248.3             (2,763.3)

                         ------------------   ----------------





Financing

  Domestic

    Banking Sector (Note 1)   (877.9)                954.3

    Non-Banking Sector         629.6               1,809.0

  External                       -                     -

                          -----------------   ----------------

Total                         (248.3)               2,763.3

                          -----------------   ----------------

HK$25,750.8 million

Debts Guaranteed by Government as at December 31, 2004 (Note 3)

HK$4,933.5 million

Notes:

1. Includes transactions with the Exchange Fund and resident banks.

2. The total Government debts of $25,750.8 million as at December 31, 2004 comprise:

(i) Toll Revenue Bond of $5,750.8 million to be repaid to Hong Kong Link 2004 Limited by the net toll revenue receivable of Government tolled tunnels and bridges. Of the outstanding Toll Revenue Bond, $450 million will mature within the next 12 months and the rest will mature by May 2016 but may be fully repaid before then; and

(ii) Retail bonds and institutional notes totalling $20 billion (including US$1.25 billion denominated in United States dollars). The maturity dates of these bonds and notes fall within the period July 2006 to July 2019.

3. Guarantees provided under the Special Finance Scheme for Small and Medium Enterprises, the Self-employment Business Start-up Assistance Scheme, the SME Loan Guarantee Scheme, the Film Guarantee Fund and the Loan Guarantee Scheme for Severe Acute Respiratory Syndrome Impacted Industries.

TABLE 2. FISCAL RESERVES

                                             Year to date 

                         Month ended         April 1, 2004 to

                         December 31, 2004   December 31, 2004

                         -----------------   -----------------

                            HK$ million         HK$ million

Fiscal Reserves at 

  start of period            272,331.1           275,342.7



Add: Consolidated Surplus/

  (Deficit)                      248.3            (2,763.3)

                         -----------------   ------------------

Fiscal Reserves at 

  end of period              272,579.4          272,579.4

                         -----------------   ------------------

NNNN