Hong Kong’s Paul Chan dismisses ‘wrongly based’ warning by credit ratings agency

Hong Kong’s finance chief has dismissed a warning by credit ratings agency Fitch about the city’s fiscal health, explaining a key part of his budget spending is for the future, with the need to speed up the Northern Metropolis’ development amid fierce competition for talent and enterprises.

In a panel discussion on Monday at the Redefining Hong Kong Series 2025: Budget Edition, organised by the South China Morning Post, Financial Secretary Paul Chan Mo-po said the hundreds of billions of bonds to be issued by the government are an “investment in the future” rather than funding recurrent expenditure, adding that the narrative about Hong Kong could be “wrongly-based” under the current geopolitical climate.

“The competition is keen. If we want to expedite our development to provide impetus to our economic growth, to diversify our economic structure, we must embrace technology as soon as possible … with this in mind, we [must] expedite the development of the Northern Metropolis,” he said.

“It’s important to demonstrate to credit rating agencies that we are financially healthy and we are borrowing for good cause, we have a reinforced fiscal consolidation plan to control expenditure growth and return to fiscal balance.”

The Northern Metropolis scheme aims to turn 30,000 hectares (74,130 acres) of land in the New Territories near the border with mainland China into an economic powerhouse and housing hub.

Fitch ratings on Friday warned that a slower pace of consolidation outlined in Hong Kong’s budget, combined with the continuing erosion of its fiscal reserve buffers, could “gradually raise risks to the city’s credit profile” and “leave the economy more vulnerable to shocks”.