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Hong Kong’s new budget seeks to slash its deficit and drive growth 

Macao’s next-door SAR is aiming to drastically reduce government spending and increase revenue to balance the budget, expected to be HK$87.2 billion in deficit
  • Some of the measures involve freezing the salaries of government workers and potentially legalising basketball betting

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PUBLISHED

ARTICLE BY

PUBLISHED

The Hong Kong government has announced a slew of measures as part of its 2025 budget, aimed at slashing the city’s deficit – estimated to be around HK$87.2 billion (US$11.8 billion) for the 2024 to 2025 financial year. 

During the delivery of his budget address yesterday, Hong Kong’s financial secretary, Paul Chan said that the government was looking to cut administrative spending by 7 percent over the next three years, aiming to “largely achieve balance in 2025-26 and return to a surplus starting from 2026-27.” 

One of the cost-cutting measures is freezing the salaries of public servants during the 2025 to 2026 financial year – a move that will also cover the chief executive and politically appointed officials. 

In addition, Hong Kong is planning to slash roughly 10,000 government positions between now and 1 April 2027.

Other measures intended to help the government shore up its revenue include increasing the airport departure tax by 67 percent to HK$200 (US$25.7), a measure that will begin in the third quarter of this year. 

[See more: Macao and Hong Kong have linked their bond markets

Meanwhile, the authorities will also replace the HK$2 (US$0.26) flat-rate public transport fare for seniors with an 80 percent discount on fares that are over HK$10 (US$1.29), and will look into the possibility of legalising basketball-related betting. 

Chan noted the authorities would also be issuing up to HK$190 billion (HK$24.44 billion) in bonds during a five year period spanning 2025 to 2029. 

Aside from these measures, Hong Kong’s government announced a range of investment initiatives, including HK$1 billion (US$128.6 million) for the building of a Hong Kong AI Research and Development Institute, HK$1.23 billion (US$158 million) in funding for the Hong Kong Tourism Board, and HK$3.7 billion (US$475.9 million) that will go towards speeding up the progress of Phase 1 of Hong Kong Park in the Hetao Co-operation Zone. 

Hong Kong’s chief executive, John Lee, remarked in a statement yesterday that the fiscal plan “proposes pragmatic measures to improve public finances, focusing primarily on strictly controlling government expenditures, supplemented by suitably increasing revenue.” Lee also highlighted the budget’s ability to “leverage market forces to promote infrastructure projects.”

Hong Kong’s gross domestic product (GDP) is expected to grow by around 2 to 3 percent this financial year, but the city continues to face a host of economic challenges, including a weak property market, an ailing retail sector that has struggled to cope as more residents shop on the Chinese mainland, and a tourism industry that is performing worse than expected. 

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