By South China Morning Post | Created at 2025-04-04 21:36:14 | Updated at 2025-04-05 03:48:36
6 hours ago
Hong Kong’s public finances are crumbling. For decades, the city’s fiscal health relied heavily on land sales. Between 2012 and 2022, land sales contributed an average of 14 per cent of government revenue.
However, in 2024-25, land sales plunged to just 1 per cent of revenue, or about HK$6.6 billion (US$848 million), a stark contrast to the average of HK$77.9 billion for the preceding decade. At the same time, stamp duty revenues have also fallen off. A revival of these revenues is unlikely in the near term.
Meanwhile, public spending continues to rise. Healthcare and pension costs – fuelled by a rapidly ageing population with more than 30 per cent of residents aged 65 or older by 2035 – are expected to balloon.
Financial Secretary Paul Chan Mo-po’s recent budget is aimed at plugging immediate gaps, with measures including salary freezes and headcount cuts in the civil service, reductions in university funding and issuing HK$150 billion to HK$195 billion in bonds each year over the next five years.
These measures provide short-term relief but risk mortgaging Hong Kong’s future while doing little to fix the city’s underlying structural problems. Borrowing could push public debt to 12 to 16 per cent of gross domestic product, while austerity threatens the city’s competitiveness.
As the world enters a new wave of technological and industrial transformation, governments worldwide are increasing investment in strategic fields. Education funding is needed to build talent pipelines and university-driven innovation. Competitive salaries are necessary for maintaining public service quality and attracting foreign investment.
