Govt forecasts $48.1b deficit

Financial Secretary Paul Chan said today that as the external environment is likely to remain complicated in the coming year and revenues related to asset markets in Hong Kong require some time to fully recover, the Government will continue to provide resources to strengthen momentum in the economy and to enhance public services.

In his Budget speech, Mr Chan said he expects that, taking into account the Government’s $120 billion bond issuance, 2024-25 will see a $48.1 billion deficit and fiscal reserves will decrease to $685.1 billion.

He stressed that substantial resources will still be allocated to livelihood-related policy areas including health, social welfare and education, representing 59.3% of recurrent expenditure. Following the pandemic, non-recurrent expenditure will substantially decrease.

On the revenue side, he expected earnings and profits tax, land premiums, and revenue from stamp duty to increase over the revised estimate for 2023-24.

The Financial Secretary said the Government is confident of overcoming the challenges currently facing the city’s public finances, and that maintaining their sustainability was a fundamental principle.

He explained that a fiscal consolidation programme was being formulated to achieve a gradual return to fiscal balance, and that fiscal reserves would be maintained at a prudent level to ensure the provision of public services while promoting economic development and allowing a buffer to roll out necessary assistance to the public and enterprises at times of adversity.

The revised estimate of government revenue for 2023-24 is $554.6 billion, 13.7% lower than the original estimate, mainly because revenue from land premiums and stamp duty decreased under a softened asset market.

Expenditure for 2023-24 is $727.9 billion, 4.3% lower than the original estimate, due to the post-pandemic situation.

Overall, a deficit of $101.6 billion is forecast for 2023-24. Fiscal reserves are expected to be $733.2 billion by March 31.