Budget Deficit Could Be Smaller Than Expected: FS

Financial Secretary Paul Chan said on Sunday that this year’s budget deficit will likely be much smaller than the original estimate he made at the start of the year, due to recovery in the economy, better-than-expected land sales and other sources of revenues.

Chan had in February predicted a budget deficit of HK$101.6 billion for the current financial year.

Writing on his blog, Chan said the economy had gradually improved with the pandemic getting under control and the exports industry going strong.

He said the government’s HK$5,000 spending voucher scheme had also boosted the catering, retail, and services industries.

Chan added that fueled by market optimism, revenue from land sales had hit a record HK$40 billion as of October. Revenue from stamp duty has also been higher than expected due to a buoyant property and stock market, he said.

But the finance chief said one-time revenue is not always guaranteed. He said the government would risk depleting its resources for the future if it spends too much on recurrent funding today.

Chan added that the government has to consider whether any one-off sweeteners would be fiscally feasible or effective, as well as whether it could benefit enough people or would be fair.

Regarding the use of resources for the future, Chan said the government must think about how it could benefit the grassroots more and share the fruits of the city’s economic prosperity more fairly.