Hong Kong is expected to log a shortfall of HK$101.6 billion in the current fiscal year ending in March, almost double the forecast given by the government last year.
Financial Secretary Paul Chan unveiled the new estimated deficit, when he delivered the annual budget for the upcoming fiscal year at the Legislative Council.
The minister had predicted the city would record a deficit of HK$54.4 billion during last year’s budget, but he updated the figure to HK$101.6 billion on Wednesday. The government’s revised revenue stood at HK$554.6 billion, which was HK$87.8 billion – or 13.7 per cent – lower than the original estimates.
“Revenue from land premium is HK$19.4 billion, substantially lower than the original estimate by HK$65.6 billion and also far lower than the previous year,” he said.
Chan estimated another deficit for 2024-25 of HK$48.1 billion.
Covid and stamp duty
Chan warned in October last year that the city might face a fiscal deficit exceeding HK$100 billion citing slow post-pandemic recovery and reduced revenue from land sales and stamp duty.
The government would have HK$733.2 billion in fiscal reserves by the end of March this year, the financial chief said on Wednesday.
The total government expenditure for the current financial year was revised to HK$727.9 billion, which fell by 10.2 per cent compared to the spending in the previous year. The figure was also HK$33.1 billion – or 4.3 per cent – lower than the original estimates.
The government is expected to spend more in the financial year of 2024-25, Chan predicted, with the estimated total expenditure standing at HK$776.9 billion. The government would also raise its recurrent spending to HK$580.2 billion, of which HK$343.7 billion would be earmarked for healthcare, social welfare and education.
The financial chief estimated that the government would earn HK$633 billion in the next fiscal year, with HK$71 billion of revenue expected from stamp duty.
A “zero-growth” approach would continue to be adopted by the government to retain the current size of the civil service establishment, which would have around 194,000 posts by the end of March next year.
“Departments will enhance their effectiveness and efficiency through prioritisation, internal redeployment and streamlining of work processes in taking forward different new policies and initiatives of the government,” he said.
Hong Kong Budget 2024 in full:
- City expects HK$101.6 billion deficit as land sales revenue dip
- City’s economy grew by 3.2% last year, inflation ‘moderate’
- Finance chief asks for ‘understanding’ over lack of sweeteners
- Costly transport subsidy schemes face review amid HK$100 billion deficit
- Artificial islands project delayed, finance chief Paul Chan says, but will go ahead
- Tobacco tax rises for second consecutive year to put public off smoking
- Higher salaries tax rate for those earning over HK$5 million annually
- No consumption vouchers as relief measures scaled back
- City seeks to bring back 3% hotel tax to increase revenue
- Extra stamp duties axed in bid to revive housing market
- Over HK$1.1 billion to ‘soft sell’ city, inc. monthly drone and fireworks shows
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