We'll spend less, prioritize public projects, says Chan

Stacy Shi

Reducing expenses - rather than increasing revenue - will be the administration's focus amid an expected fiscal deficit of nearly HK$100 billion, says Financial Secretary Paul Chan Mo-po.

Chan, on his blog, said public finances have been in the red for the past two consecutive years due to massive expenses from the pandemic, high interest rates, geopolitical issues affecting capital flow and local asset markets.

Hong Kong had a budget deficit of HK$122 billion in 2022-23 and HK$101.6 billion in 2023-24, with the financial year ending in March projected to be just under HK$100 billion.

"The consolidated deficit for the current fiscal year, after taking into account the bond issuance, is expected to be below HK$100 billion," he said. Chan said the administration has been sparing no effort to build a vibrant economy while highlighting that the key to improving public finances is to increase revenue and reduce expenditure.

"The strategy will focus mainly on managing and controlling the increase in public expenditure while maintaining and improving public services."

Public projects will be prioritized and their time frame adjusted, with Northern Metropolis and other economic and housing projects to receive priority.

"We will also make good use of market funding through bond issuance and public-private partnerships to develop infrastructure projects, aiming to create room for accelerating the growth of new economic dynamics that can be transformed into tax and other revenues."

Other measures include controlling spending through reallocating resources and prioritizing works, promoting technological application to optimize service efficiency and reviewing the operation of individual funding schemes.

"It is inevitable for us to look into some funding schemes as the expenditure growth will bring significant long-term impact to public finance," Chan said.

"We have heard many different views from the community."

He said that when assessing options, the administration must be aware of the actual situation and avoid decisions that could suppress the economic recovery momentum.

Chan emphasized adhering to a minimal and straightforward tax system to preserve the city's competitive advantage and minimize the impact on the public under the "affordable users pay" principle.

stacy.shi@singtaonewscorp.com