Hong Kong’s finance chief should have been bolder in rolling out “groundbreaking” measures to cut spending on underperforming civil servants to plug the deficit, economists have said as they pour cold water over the city’s capability to balance the books in two years amid rising global uncertainties.
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The experts held a pessimistic view of the city’s fiscal outlook, saying that Financial Secretary Paul Chan Mo-po’s latest budget lacked bold reforms or innovative measures as Beijing expected.
Xia Baolong, director of the Hong Kong and Macau Affairs Office, earlier met Chan and seven other ministers to hear their plans on rebooting the city’s sluggish economy and development, just two weeks before unveiling the financial blueprint.
Beijing’s point man on city affairs told the senior officials to abide by President Xi Jinping’s directions issued during the third plenum of the Communist Party – “to be bold in reform, dare to break new ground and innovate continuously”.
In his annual budget on Wednesday, Chan said the deficit would be HK$87.23 billion (US$11.2 billion) for the current financial year and HK$67 billion for the following one after a host of cost-cutting measures including a pay freeze for all civil servants and 2 per cent cut in government recurrent expenditure for three years to help balance the books. They are expected to save at least HK$107.5 billion over the next five years.
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The revenue-raising measures will fetch HK$5.22 billion per year and rise to HK$20.22 billion a year from 2027-28. They include increasing the air passenger departure tax to HK$200 and other charges for road users, overseas talent, and investors under a user-pays policy.