Fiscal outlook: $67 billion deficit projected for upcoming year

The government is anticipating a HK$67 billion deficit for the coming fiscal year, with fiscal reserves expected to decrease to HK$580 billion, Paul Chan said.

In the 2025-26 fiscal year, total expenditure is set to rise by 8.9 percent, reaching HK$822 billion. Of this recurrent expenditure, 60 percent will be dedicated to livelihood-related policy areas, including healthcare, social welfare, and education, totaling HK$348 billion.

Regarding revenue, Chan estimates it will be HK$659 billion, with earnings and profits tax projected at HK$301 billion. 

Also, revenue from land premiums is estimated at HK$21 billion.

Chan also provided revised estimates for the 2024-25 fiscal year. He noted that the deficit for that year is expected to reach HK$87.2 billion, with fiscal reserves projected at HK$647 billion by March 31. 

Revenue for 2024-25 is estimated at nearly HK$560 billion, reflecting an 11.6 percent decrease from the original estimate, primarily due to lower revenues from land premiums and stamp duties amid a struggling asset market. 

However, earnings from profits tax and salaries tax remained stable.

Chan added that expenditure for 2024-25 is comparable to the original estimate of HK$754 billion.

(Jamie Liu)