Hong Kong's government said on Wednesday that it proposed to raise the borrowing ceiling from HK$500 billion to HK$900 billion for the Infrastructure Bond Programme and the Government Sustainable Bond Programme under the Capital Works Reserve Fund, aiming to increase the city's capacity to finance public works like the Northern Metropolis.
Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said that the government's capital works expenditure for 2025-26 is estimated to be about HK$125 billion, while an additional HK$30 billion will be earmarked in the next two to three years which is outlined in the 2025 Policy Address that will be used to increase expenditure on public works projects to drive sustained economic development and support the local construction industry.
The capital works expenditure is estimated to be about HK$128 billion for 2026-27 and will remain at a similar level from 2027-28 to 2030-31, he added.
Issuing government bonds is one of the public financial management tools, and issuing bonds to support infrastructure development is a common practice worldwide, Hui noted.
"As public works projects are long-term investments, in particular those in the NM, there is a need for the government to issue more longer-term bonds to align more closely the cash flow duration with project requirements," he said.
Hui added that the government plans to issue about HK$160 billion to HK$220 billion worth of bonds per annum from 2026-27 to 2030-31, and the corresponding ratio of government debt to gross domestic product will rise from 14.4 percent to 19.9 percent, which is a highly prudent level and well below that of most advanced economies.
