HK budget deficit may be less than forecast: finance chief

18 Jan 2022

Hong Kong’s budget deficit for the 2021/22 financial year may be less than previously forecast, says Financial Secretary Paul Chan Mo-po, bolstered by a steady economic recovery and lively trading in the property and equity market.

“Fuelled by the brisk trading of the home and stock market, the stamp duties revenues from property and equity market transactions are better than expected, this has remarkably moderated the pressure of registering a large-scale government budget for the financial year of 2021-22,” the finance chief stated.

The government had forecast a budget deficit of HK$101.6 billion ($13 billion) for the 2021/22 financial year when the Budget was unveiled last February.

In addition, Hong Kong’s export sector performed well, and the unemployment rate declined to 4.1%. Domestic consumption also gained pace as a result of the electronic consumption voucher scheme, and private investments have also grown.

As such, the Financial Secretary says these factors support the forecast for a 6.4% growth rate in 2021. This figure will be published when the 2022/23 Budget is delivered in February.

Moreover, Paul Chan Mo-po highlighted the need for a cautious stance in relation to public finances management.

“Amid the complex international political and economic situation, we should maintain our financial arsenal to ensure Hong Kong’s financial system will be stable, and to accommodate those known and unknown scenarios and needs,” Chan said.

“As a small and open economy, Hong Kong should guard the potential risks and impacts of the rising inflation in overseas economies, including the risk of an interest rate hike, the reversal of capital flows and asset price volatility.”

Furthermore, the Financial Secretary added that the largest variable and potential obstacles to Hong Kong’s economic growth are changes within the pandemic situation.