2024/25: forecast consolidated deficit of $87.2 billion. Fiscal reserves are forecast to be $647.4 billion by end March 2025
2025/26: forecast consolidated deficit of $67.0 billion
Operating Account: estimated to return to a surplus within 2 years, i.e. from 2026/27
Fiscal reserves are estimated at $579.1 billion by end-March 2030
Enhancing Fiscal Consolidation Programme
Principles
Strictly control government expenditure as the main focus, supplemented by increasing revenue, to minimise the impact on the general public
Ensure delivery of high-standard public services, and accelerate the development of the Northern Metropolis and infrastructure projects related to people’s livelihood and the economy
Maintain competitiveness of Hong Kong’s low and simple tax regime
Uphold “user pays” principle and the “affordable users pay” principle when increasing revenue
Strictly containing government expenditure growth
Pay freeze for all personnel of executive authorities, the legislature, the judiciary and Members of the District Councils in 2025/26
Stepping up the Productivity Enhancement Programme: a cumulative 7% cut from 2024/25 – 2027/28. Recurrent government expenditure in 2027/28 to decrease by $27.3 billion compared to 2023/24. CSSA, Social Security Allowance and statutory expenditure are not affected
Civil service establishment: reduce by 2% each in 2026/27 and 2027/28. Reduction of about 10 000 posts by April 2027
Funding for UGC-funded universities: funding of $68.1 billion in next 3 years, reflecting an annual reduction target of 2%
Adjust the two transport subsidy schemes to reduce government expenditure by about $6.2 billion in the next 5 years:
The $2 Scheme:
Targeted beneficiaries remain unchanged;
Implement the“$2 flat rate cum 80% discount” (for trips with fare above $10, 80% discount); and
number of concessionary trips limited to 240 per month
Public Transport Fare Subsidy Scheme:
threshold for subsidy collection raised from $400 to $500 starting from June 2025
subsidy amounting to one-third in excess of the threshold will continue to be provided, while the subsidy cap at $400 per month will remain unchanged
Assist bureaux and departments in reducing expenditure
strengthen the exercise of fiscal prudence and optimal use of public funds
enhance procurement system to procure quality goods and services at reasonable prices
relevant bureaux to review expenditure on social welfare, healthcare, and education
Enhance public service efficiency: leveraging technology, streamlining processes and driving digital transformation of public services
Capital Works Expenditure
Enhance cost control on all fronts
Formulate policies on direct procurement and central procurement by a single department
Review district cooling systems in new development areas; estimated savings of at least $40 billion in works expenditure
Increase revenue:
Starting from October 2025, increasing air passenger departure tax from $120 to $200. Government revenue to rise by about $1.6 billion per year
Under various talent and capital investor admission schemes, with immediate effect,
Charge an application fee of $600
Raise visa fee to $600 or $1,300 based on the duration of limit of stay
thereby increasing revenue by $620 million per year
Review tolls of government tunnels and strategic routes, licence fees for electric private cars, parking meter charges and fixed penalties for traffic offences. Government revenue estimated to increase by $2 billion
Explore boundary facilities fee on private cars departing via land boundary control points (taking a fee of $200 per private car as an example, the measure will bring in revenue of about $1 billion per year) without affecting tour coaches and goods vehicles
Implement global minimum tax proposal to address base erosion and profit shifting, i.e. BEPS 2.0, to bring in tax revenue of $15 billion annually
Bond Issuance
While amount of bonds is contained at a level that ensures fiscal prudence, capital can be used flexibly and for investing in future economic development, bringing greater returns and benefits to the society
As works are rolled out in the Northern Metropolis, government expenditure on works will reach its peak. Average annual capital works expenditure will grow from about $90 billion to about $120 billion over the next 5 years
Issue bonds worth $150 billion to $195 billion each year under the Government Sustainable Bond Programme and the Infrastructure Bond Programme over the next 5 years. About 56% of which is to be used for re-financing short-term debts
Ratio of government debt to GDP will be maintained at 12% -16.5%, which is still considered a stable and manageable low-debt level, and much lower than that of many advanced economies
Proceeds from bond issuance will not be used for funding government recurrent expenditure
