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.
- HK logs estimated HK$87.2bn deficit, 7% spending cuts over coming 3 years.
- Democratic Party urges pay cut for senior officials
- Gov’t defends plan to axe HK$2,500 student subsidy
- Measures do not address poverty, Hong Kong NGO says
- Public transport subsidy cut back as threshold upped to HK$500.
- Hong Kong to halt commercial land sales on hold amid high vacancy rates.
- HK$1.2 billion earmarked to boost tourism.
- HK$1 billion set aside to set up AI research institute.
- Hong Kong taxpayers will see lower tax reduction in 2025-6.
- Pay freeze for gov’t employees, inc. civil servants, judges, and chief exec.
- Fines for traffic offences, parking meter fees to rise.
- Use of HK$2 transport scheme for elderly capped to 240 trips per month.
- Hong Kong airport tax to rise from HK$120 to HK$200.
- Hong Kong considers legalisation of basketball gambling.
- Activists call off traditional demo at gov’t HQ citing ‘immense pressure’.
Stay tuned to HKFP for full, trusted coverage of the 2025 budget.
The cost-cutting goal would give the government a “clear pathway” towards restoring fiscal balance within the current administration’s term, Chan added.
