No rush to issue bonds

Financial Secretary Paul Chan Mo-po says the government is not in a rush to issue bonds at the moment, thanks to still strong fiscal reserves. The issuance will depend on the economic situation and the level of interest rate increases.

If interest rates are to be raised to a higher level, the bond maturity can be shortened to increase fiscal flexibility, Chan said on a radio program yesterday.

Earlier, Chan said the interest payments have been calculated and are fully affordable amid the rate-rise circle.

In his budget speech last week, Chan said the government plans to issue HK$65 billion worth of bonds in each of the coming five years, including infrastructure and green bonds.

It came as the city's fiscal reserves are expected to dwindle to HK$817.3 billion by the end of March following an estimated deficit of HK$140 million.

The reserves are forecast to further fall to HK$762.9 billion at the end of the next fiscal year, which is equivalent to 12 months of government expenditure.

Chan said the bond issuance is to manage cash flows as infrastructure and other public works projects will involve an average of more than HK$100 billion a year over the next five years.

Chan reiterated that the government's outstanding debt accounted for only 4.5 percent of the gross domestic product by March and is expected to rise to 9.5 percent in the 2027-28 financial year, which is still at a lower level compared to the rest of the world.

Separately, Chan said he believes land sales will return to normal when the local property market stabilizes.

MTR Corp pulled the tender for the first phase of an Oyster Bay project this month following similar withdrawals by the Lands Department and Urban Renewal Authority for sites in Stanley and Kwun Tong earlier this year.