Estimates for 2011-12
179. I now give a brief account of the estimates for 2011-12.
180. Operating expenditure for 2011-12 is estimated to be $298 billion, including recurrent expenditure of more than $242 billion. Of the recurrent expenditure, 56.4 per cent will be used in the three policy area groups of education, health and social welfare. Recurrent expenditure for 2011-12 will increase by nearly eight per cent when compared with 2010-11. This reflects that the Government is always committed to caring for people's livelihood. Taking into account the provision for meeting service growth, and the measures proposed in the Policy Address and in this Budget, operating expenditure for 2011-12 will be higher than that for 2010-2011 by 24 per cent.
181. I forecast that capital expenditure will amount to $73.1 billion, including $58.3 billion on capital works. Total government expenditure is estimated to reach $371.1 billion, an increase of $67.6 billion over 2010-11. Public expenditure will be equivalent to 21 per cent of our GDP. The estimated government expenditure for 2011-12 is $136.3 billion, or 58 per cent, higher than 2007-08. The increase is also greater than the 15.8 per cent nominal GDP growth over the same period.
182. I estimate that total government revenue for 2011-12 will be $375 billion. Taking all these into account, I forecast a surplus of $3.6 billion in the Operating Account and a surplus of $300 million in the Capital Account. This will result in a surplus of $3.9 billion in the Consolidated Account, equivalent to 0.2 per cent of our GDP. Fiscal reserves are estimated at $595.5 billion by end-March 2012, representing about 32 per cent of our GDP and equivalent to 19 months of government expenditure.
Medium Range Forecast
183. For the medium term, I project that the annual average growth rate will be four per cent in real terms for the period 2012-15, while the underlying inflation rate will average 3.5 per cent. I forecast an annual surplus in the Operating Account for the period between 2012-13 and 2015-16. With a number of major infrastructure projects entering their construction peaks, a deficit will arise in the Capital Account, but a surplus is expected in the Consolidated Account. Fiscal reserves are estimated at approximately $697.7 billion by end-March 2016, representing about 30 per cent of our GDP and equivalent to 20 months of government expenditure. This figure has not deducted the $50 billion I previously pledged to allocate for the implementation of health care reform.
(To be continued)
Ends/Wednesday, February 23, 2011
Issued at HKT 12:56