Paul Chan warns Hong Kong’s deficit may exceed HK$100 billion

Financial secretary Paul Chan Mo-po expects Hong Kong’s deficit to exceed HK$100 billion as he said the city’s post-Covid revival is slower than expected and pointed to the declining external economical environment. 

Still, Chan noted that the economic cycle always has its ups and downs and stressed that the current reserve in the treasury can support Hong Kong through this tough time. 

Speaking on an RTHK program on Friday, Chan noted that authorities won’t make any tax changes at the moment. 

He also explained that the deficit may be higher than the HK$54.4 billion estimated in the 2023-24 Budget due to the falling incomes in land selling and stamp duty. 

On the relaxed “spicy measures” of home buying, Chan said the buyer’s stamp duty targeting non-local buyers and the new residential stamp duty targeting second homes were introduced so that Hongkongers without any property can buy homes first when the supply has tightened. 

He believes the measures are worth keeping and therefore the government has decided not to scrap the two duties but instead has halved them from 15 to 7.5 percent in the latest policy address. 

When asked if authorities would cancel more “spicy measures” in the future, Chan only said the government will make further decisions after considering factors such as the supply and demand, the market atmosphere, and the market outlook. 

The finance chief also said the issue of Hong Kong’s sky-high home prices has remained for a long time and authorities won’t be so keen to make any uproot changes in the short term. 

He went on to say that as long as there isn’t a faith crisis and panic-selling in the market that would endanger financial security, authorities won’t have to intervene and the market will make self-adjustments.