Debating on the second reading of the Appropriation Bill 2003, Leung said since he delivered the Budget on March 5, there has been a spate of big events affecting Hong Kong's economy.

"While the war in Iraq was factored into the Budget, we could not anticipate the outbreak of atypical pneumonia," he said, adding the government understands the general public and businesses are facing added hardships.

The Financial Secretary said Hong Kong is now mobilizing manpower and resources to contain the spread of this disease as quickly as possible, to restore public confidence in Hong Kong andthat of the international community.

Up to Wednesday, the number of cases of Atypical Pneumonia reached 970. The disease spreading for nearly a month in Hong Konghas striking the local economy heavily. Hong Kong government has taken a series of measures to deal with the situation.

Leung said since the atypical pneumonia problem will impede economic growth, and consequently reduce government revenue, the government will keep a close watch on the situation and assess its impact.

"Apart from tackling the immediate problem, to ensure long-term, steady and healthy economic development, we also need to eliminate the fiscal deficit in the medium term," he said.

Leung said Hong Kong is facing unprecedented challenges, and now is the time for the society to bring into full play its characteristics of mutual assistance, solidarity and affection.

"If the government and the citizens are of one mind, it is certain that Hong Kong can soon win this battle against the disease, revive the economy and tide over our difficulties," he said.

(Xinhua News Agency April 10, 2003)