Distinguished speakers, dear friends, collaborators and guests, let me once more, as a host, to thank you for the precious time you dedicated, joining us in the celebration of the 60-th anniversary of central banking in the Republic of Macedonia, as well as for your participation in the today's conference. I wish you pleasant work and fruitful discussion, beneficial for all of us. Thank you. 4  BIS Review 100/2006
It has been acknowledged that at least part of the deficit may be structural rather than cyclical in nature. Although official projections suggest that the combination of cyclical recovery and disciplined containment of government spending should restore fiscal balance in due course, scepticism is understandable; this is an extraordinarily difficult field for forecasters, since the balance is the difference between two very large numbers, each comprised of many varied components. The air of uncertainty gives rise to rumours – of sweeping expenditure cuts, of asset sales, of new taxes, of higher tax rates or whatever – and to fears that Hong Kong may not be able to preserve its distinctive edge as a place with an uncomplicated tax system and low rates of tax. Concerns which arise under any of the above headings may find expression through the financial markets. Conclusions What can one conclude from all of this? •  First, a number of reasons have been enumerated as to why fiscal deficits may be a worry, both for economies generally and for Hong Kong in particular. There can be no doubt that Hong Kong's fiscal position is a matter for concern, but monetary factors should not necessarily be paramount to that concern. •  Secondly, and in the same broad context, one should beware of simplistic assertions or hypotheses about the monetary implications or, more specifically, the exchange rate implications of fiscal deficits.