Paul Chan's response to HK$100 bn deficit: Govt cuts 1% of annual recurrent expenditure of departments

The Financial Secretary, Paul Chan, said earlier that according to preliminary estimates, the consolidated deficit for 2024/2025 will be around HK$100 billion, higher than the HK$48.1 billion estimated in this year's Budget. In a radio program today (Dec. 8), Chan explained that it was mainly due to the decrease in government revenue, including the high interest rate, the public's hesitation to buy their own homes, the decrease in stamp duty revenue from the property market, and the decrease in stamp duty revenue from the stock market, as well as the different pace of post-epidemic recovery for different enterprises, which he believed to be only a cyclical situation.

Chan pointed out that the government is now carrying out fiscal consolidation and opening up new sources of income and cutting expenditure, mainly reducing the growth of government departmental expenditure by 1% per annum of recurrent expenditure and freezing manpower at the same time, and will review the adequacy of the strength when preparing the new budget later on.

He emphasized that the government does not want to add to the burden of the public, especially the middle class, and has to take into account the need for enterprises to rebuild their balance sheets in the wake of the epidemic, so it has been very careful in raising revenue.

The subscription amount of government infrastructure retail bonds is about HK$17.8 billion, which is lower than the target of HK$20 billion.

Paul Chan said that there was no cause for concern because the bonds had been oversubscribed by three to four times in terms of institutional subscription. He also mentioned that the government expects the property market to develop steadily.

As the economy is cyclical, the government has to think of ways to develop the economy during this period to "make a big pie", cultivate new industries and accelerate the results. Chan believes that it will take "three years or so" to achieve fiscal balance.

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