The Hong Kong government could reduce land sale prices, improve the efficiency of 167,000 civil servants and temporarily freeze their pay as possible solutions to ease the HK$100 billion (HK$12.85 billion) deficit, experts have said, while admitting there are no simple solutions.
A day after finance chief Paul Chan Mo-po projected the deficit would more than double from an initial projection of HK$48 billion for the 2024-25 financial year, city leader John Lee Ka-chiu said on Tuesday that “the government will start by cutting expenditure and increasing revenues”.
Despite the efforts, an economist said he was pessimistic about the economic outlook given the incoming US presidency of Donald Trump, who has vowed to slap additional tariffs on Chinese goods.
“Trump will be in office from January for four years, and everyone [in the cabinet] so far is not very friendly, if not hostile. What would be the cause for things to turn around? I am doubtful,” economist Simon Lee Siu-po said.
The 2024-25 financial year will be the third in a row for the Hong Kong government to record a deficit of at least HK$100 billion. In 2022-23, the deficit was HK$122.3 billion, followed by HK$100.2 billion in 2023-24.
Simon Lee said Hong Kong has been too reliant on land sales and stamp duty for its income and needed to diversify its income sources in the long run by including levies such as sales tax.
