Budget 2025: Hong Kong logs estimated HK$87.2 billion deficit, will cut spending by 7% over coming 3 years
Hong Kong Free Press
Hong Kong will cut government spending by 7 per cent over the coming three years, Financial Secretary Paul Chan has announced in his 2025 budget speech, as the city logged an estimated HK$87.2 billion deficit.
Speaking at the Legislative Council on Wednesday, Chan said that the current fiscal year deficit marks the third shortfall in a row after the city recorded a deficit of HK$122 billion in 2022/23, and HK$101.6 billion last year.
Chan last month estimated that the fiscal deficit would fall just below HK$100 billion, following earlier estimations that the shortfall would reach that figure for the third consecutive year.
The government will rely on cost-cutting measures to balance its books, Chan said, while finding new revenue sources was “not a top priority.”
“Taking into account the issuance of government bonds of HK$130 billion and repayments of HK$22.1 billion, it is expected that there will be a consolidated deficit of HK$87.2 billion for 2024‑25,” Chan said.
Fiscal reserves are expected to hit HK$647.3 billion by 31 March 2025, he added.
Land revenue slows
This year’s deficit was up from the HK$48 billion deficit forecast in Chan’s budget speech last year. The minister has cited a hobbled property market that has taken a toll on government revenue from land sales and stamp duties.
Land-related revenue has conventionally been a main source of income for the Hong Kong government, but those figures have plunged in recent years. As of January, Hong Kong has brought in HK$4.3 billion in land revenue — 12 per cent of the HK$33 billion target set last year, according to Reuters.
Chan also said on Wednesday that the government will reduce a cumulative 7 per cent in recurrent expenditure from now, through to the 2027-28 fiscal year.
“Strictly containing public expenditure is a must, but we should proceed in a steady and prudent manner and be careful to find a balance among the various impacts that may arise in the process,” Chan said earlier that morning.
The cost-cutting goal would give the government a “clear pathway” towards restoring fiscal balance within the current administration’s term, Chan added.
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