Hong Kong lawmakers have approved the 2025 Budget bill, which includes total government expenditure of HK$822.3 billion.
The 2025 Appropriation Bill was passed on Wednesday after its third reading in the Legislative Council (LegCo).
Financial Secretary Paul Chan told lawmakers that Hong Kong recorded a HK$80.3 billion deficit in the previous fiscal year, which was HK$6.9 billion lower than the estimate he provided in February when he delivered the 2025 Budget.
The deficit was lower than forecast because government revenue of HK$564.9 billion was 1 per cent higher than expected, Chan said.
This was mainly due to higher stamp duties and salaries tax received, while government spending – amounting to HK$753.2 billion – was also HK$1.5 billion lower than anticipated.
Deficits are expected to narrow annually over the next five years, and government accounts will return to a surplus in the 2028-29 fiscal year, the finance chief told LegCo.
As of March 31, the Hong Kong government’s fiscal reserves stood at HK$654.3 billion.
According to the budget announced in February, the government’s largest expenditure for the 2025-26 fiscal year is expected to be on health-related policies, with an estimated cost of HK$141 billion.
The second-largest expenditure is HK$139.1 billion for social welfare, followed by HK$119.3 billion for infrastructure.
In the budget address, Chan pledged to cut government spending by 7 per cent over the coming three years. The government also proposed a list of measures to increase revenue, including hiking penalties for traffic-related offences.
The authorities also green-lighted the legalisation of basketball betting by launching a one-month public consultation in April.
On Wednesday, Chan reiterated that Hong Kong would maintain its free trade policies despite the tariffs imposed by the US earlier this month on Chinese imports, including goods from Hong Kong, which reached a “crazy level” of 245 percent, according to the minister.
“In the face of the bullying acts of the US and protectionism, Hong Kong must recognise the new settings and new order of global trade. We must keep our status as a zero-tariff port,” Chan said in Cantonese.
Chan acknowledged economic uncertainty amid the US monetary policy and the global economic outlook, which may affect consumption and investment sentiment in Hong Kong.
But the continuous growth of the mainland Chinese economy, together with the Hong Kong government’s measures to stimulate the economy, would help support different sectors, he said.
Chan added that one should not focus on only one fiscal year when analysing the government’s financial situation. Instead, they should look at the performance throughout an economic cycle, he said.
