Hong Kong to cut costs as deficit expected to hit nearly HK$100 billion

Hong Kong’s financial secretary has pledged to focus on curbing growth in recurring expenses and prioritising public works to rebalance the budget in the next three to five years, with the city’s deficit expected to reach nearly HK$100 billion this fiscal term.

Financial Secretary Paul Chan Mo-po also said on Saturday that he “absolutely disagrees” that home prices would definitely fall and reiterated his opposition to resuming land sales via an application list system, which would ensure the government retains full control over land supply.

The deficit estimate for the financial year ending this March had initially been put at HK$48.1 billion (US$6.2 billion) in last February’s budget, though Chan had since suggested the shortfall could hit “about HK$100 billion” owing to disappointing land sales revenues.

During a town hall session on Saturday, the financial chief updated the deficit forecast to “hit somewhere about under HK$100 billion” before next month’s budget speech, as the back-to-back shortfall again came into focus.

He said the government would ramp up spending cut initiatives in the next budget: “Everyone talks about increasing revenue and reducing expenditure, but our main focus will be on reducing expenditure.”

“The first focus in reducing expenditure is to control the growth of recurring expenditures,” he said.