Hong Kong will cut public spending and restore fiscal balance by mid-2027 after a string of huge deficits, the city’s finance chief said Wednesday as he unveiled growth plans including an artificial intelligence institute.
Officials are under pressure to balance the books as Hong Kong faces its toughest fiscal test in three decades, with annual deficits exceeding US$20 billion in four of the past five years.
It is also being weighed by China’s economic malaise and a looming US-China trade war, following an opening salvo of tariffs from President Donald Trump.
The economy is expected to grow between two and three percent this year, on par with last year’s 2.5 percent.
Financial Secretary Paul Chan said in his annual budget speech that the government will contain spending in a way that minimises the impact on public services and livelihoods.
A “cumulative reduction” of government recurrent expenditure by seven percent through to 2027-28 would take place, he said.
“It gives us a clear pathway towards the goal of restoring fiscal balance in the operating account… within the current term of the government,” which ends in June 2027, he added.
Chan announced a pay freeze for all branches of government and said around six percent of its 170,000-strong civil service will be trimmed by April 2027.
Other spending curbs include a cap on a transport subsidy for people aged above 60.
Hong Kong has long relied on land-related revenue to fill government coffers, but income from that plunged last year to US$1.7 billion — the lowest in two decades.
Chan said Hong Kong’s asset market was “under pressure” and that land-related revenue will rebound to US$2.7 billion this year.
The government said it would not put commercial land up for sale in the coming year amid high office vacancy rates.
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