HK budget: Fiscal reserves projected at HK$657.2 billion by March-end

HK budget: Fiscal reserves projected at HK$657.2 billion by March-end

HK Budget: Fiscal Reserves Projected at HK$685.1 Billion by March 2025

The Hong Kong government’s 2024-25 budget outlines a strategic fiscal consolidation plan, with projected fiscal reserves of HK$685.1 billion by March 2025, reflecting a reduction from the HK$733.2 billion forecast for March 2024. The 2024/25 fiscal year is expected to record a consolidated deficit of HK$48.1 billion, down from HK$101.6 billion in the previous year. This trend aligns with the government’s goal to achieve fiscal balance by 2028/29, with surpluses projected from 2025/26 onward, culminating in reserves of HK$832.2 billion by March 2029.

The fiscal consolidation program emphasizes expenditure restraint and targeted revenue enhancements. Operating expenditure growth will remain at zero for the civil service, while recurrent government spending is set to decrease by 1% in 2026/27, excluding social security schemes like the Comprehensive Social Security Assistance (CSSA). The government also plans to review the sustainability of subsidy programs, such as the Public Transport Fare Concession Scheme for the elderly and disabled, ensuring continued support without financial strain.

Capital works projects are undergoing prioritization, with mature initiatives—such as infrastructure development for the Northern Metropolis—proceeding as planned, while less advanced projects face rescheduling based on urgency. Revenue measures include higher business registration fees (increased to HK$2,200 annually from April 2024) and a resumption of the 3% Hotel Accommodation Tax from January 2025. A proposed two-tier salaries tax regime would affect only high-income taxpayers with over HK$5 million in net income, while a progressive rating system for domestic properties targets properties with rateable values exceeding HK$550,000.

These measures aim to balance fiscal prudence with social welfare, ensuring long-term stability amid economic uncertainties. The government’s focus on cost-effectiveness and revenue diversification underscores its commitment to maintaining fiscal reserves at a “prudent level” while addressing public service needs.

(https://www.budget.gov.hk/2024/eng/pf.html): Hong Kong’s 2024-25 Budget – Public Finance (budget.gov.hk)