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The following is issued on behalf of the Housing Authority:
The Housing Authority (HA) must exercise prudence in financial management in order to maintain its public housing development programme, although its finance is sustainable in the short and medium term.
The Chairman of the HA's Finance Committee (FC), Mr Wong Yuen-fai, said this today (January 8) after the meeting endorsing the 2008/09 proposed budget.
"In the five years between 2007/08 and 2011/12, the HA plans to incur construction expenditure of $6.5 billion per year on average to produce adequate public rental housing flats to maintain the average waiting time at about three years. This means an annual production of about 15,000 flats on average," he added.
The FC today endorsed the 2007/08 revised budget and 2008/09 proposed budget and noted the financial forecasts for 2009/10 to 2011/12.
The HA's cash balance is projected to increase from about $55.7 billion by end of March, 2008 to about $68 billion by end of March, 2012, mainly due to sale of the surplus Home Ownership Scheme (HOS) flats and projected investment income.
In explaining details of the budget, Mr Wong said that the consolidated operating result in the 2007/08 revised budget shows a surplus of $0.3 billion as compared to the 2007/08 approved budget of $1.7 billion, mainly due to the earlier-than-budgeted completion of sale of a number of surplus HOS flats in Phase 1 in March instead of April, 2007, the related surplus of which has been recognised in the 2006/07 accounts; the earlier-than-budgeted rent reduction of 11.6% for public rental housing effective from August instead of September, 2007; the unbudgeted salary adjustment in 2007/08; and the increase in maintenance expenditure.
The consolidated operating result in 2008/09 shows a surplus of $0.8 billion which is higher than the 2007/08 revised budget by $0.5 billion, mainly due to the increase in the number of surplus HOS flats for sale in 2007/08.
It is projected that the consolidated operating results in 2009/10, 2010/11 and 2011/12 will be in deficits of $0.7 billion, $2.3 billion and $2.6 billion respectively, mainly due to the diminishing HOS sale proceeds and the deficits recorded in the Rental Housing Operating Account.
The consolidated surplus taking into account the investment return is projected to be $3.5 billion and $4.2 billion in the 2007/08 revised budget and the 2008/09 proposed budget respectively. The consolidated surplus is projected to decrease from $3 billion in 2009/10 to $1.2 billion in 2011/12.
After all the surplus HOS flats are sold, the recurrent and capital expenditure of the Authority will be met by its recurrent receipts and investment income.
"The HA will continue to exercise prudent financial management with a view to ensuring adequate funds to meet its recurrent and capital requirements, accomplishing its mission in a sustainable manner and fulfilling its commitment to meet its policy pledge." he said.
The budget will be submitted to the HA on January 24 for approval.
Ends/Tuesday, January 8, 2008
Issued at HKT 14:19
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