Hong Kong's public finance, retail sales improving, Paul Chan says

Hong Kong's public finance situation is improving, Financial Secretary Paul Chan Mo-po said, as he signaled that retail sales growth for December, to be released later this week, will accelerate.

Benefiting from last year’s buoyant financial markets and a near doubling of the city’s average daily stock turnover to about HK$250 billion, revenue from stock stamp duty came in higher than originally budgeted, Chan wrote in his blog on Sunday. 

Together with ongoing fiscal consolidation efforts that contained spending growth, the government’s operating account is expected to return to a surplus in the current financial year ending March, a year earlier than previously estimated, he said, adding that bond issuance will still be needed for the capital account to fund the continued investment in infrastructure and the Northern Metropolis.

Therefore, public resources must continue to be managed prudently so that the growth of expenditure does not exceed revenue, Chan stressed, adding that Hong Kong must maintain strong buffers in the financial system and reserve sufficient fiscal resources to deal with potential shocks in the face of inevitable volatility and uncertainty in external markets.

The government booked a surplus of HK$43.9 billion for the nine months ended December, as salaries and profits taxes, the two major types of revenue, are mostly received in December and January.

Chan said different sectors raised requests to better address their needs during the consultation for the 2026/2027 budget, which is scheduled to be announced in the month. 

At the same time, he said major opportunities from technological changes, including artificial intelligence, have led the market to expect the government to increase investment, accelerate the development of more high-value-added industries, and create more quality jobs so the economy can grow faster and benefit different segments of society. 

Chan said that the SAR’s retail sales growth would outpace November’s 6.5 percent in December and that overseas companies’ confidence in investing in Hong Kong is strengthening. 

Hong Kong's economy expanded 3.5 percent last year, better than the 3.2 percent increase the government previously estimated.