Hong Kong’s next budget will balance support for everyday residents against city’s long-term needs, finance chief says

Hong Kong’s finance chief has said his coming budget will be focused on supporting people’s livelihoods amid the economic hardships of the coronavirus pandemic, while also taking into account the financial stability and long-term development needs of the city.

Writing on his official blog on Sunday, Financial Secretary Paul Chan Mo-po also said the fiscal deficit for this financial year had gradually declined from a peak of HK$115.7 billion (US$14.8 billion) in September last year to HK$65.8 billion in November, due in part to a HK$29 billion net cash inflow from the sale of government green bonds.

Chan said he expected further improvement after the collection of profits and salaries tax last month, and taking into account investment income from the Exchange Fund, the war chest used to back the local currency.

But Chan noted the government still had considerable expenses to pay before the end of the financial year to keep up daily operations. Past experience has shown that from February to March, the government often spends more than it takes in.

“The global market is also facing the threat posed by the epidemic and risks from rising inflation and interest rates, especially the possible impact on capital flows and asset prices,” he wrote, presenting an uncertain economic forecast. “The market is under a haze of geopolitical tensions – these make the global economic outlook more complex and volatile.

“My team and I have been carefully judging these uncertain factors and making dynamic evaluations while preparing the next year’s budget.”

Chan said that besides sustaining the economy under the pandemic, the medium- to long-term development requirements of the city would also be accounted for in the forthcoming budget in a bid to carefully balance various needs.