Investing in megaprojects crucial for Hong Kong’s growth despite deficits: Paul Chan

Hong Kong must invest in megaprojects such as the Northern Metropolis to drive economic growth even if they cause deficits, the finance chief has said, while appealing for understanding from the middle class over a lack of sweeteners in the latest budget.

Financial Secretary Paul Chan Mo-po further explained his fiscal philosophy on Thursday, saying that keeping expenditure within revenue limits should be the basis for managing the government’s operating account.

While the government aimed to achieve a surplus in the operating account, the capital account – which is expected to record a deficit in the coming five years – should be used for future investments, including infrastructure projects and expanding economic capacity, Chan said.

“I believe that the money should be spent when needed. If this is the crucial time for Hong Kong’s future development, it will be inappropriate not to seize this opportunity to invest in the future and create opportunities for the future,” he told a radio programme.

“As long as we have a plan that supports our development and gradually reduces the deficit, aiming to restore balance over time, I don’t see any problems with it.”

According to the annual budget announced on Wednesday, the capital account is expected to record a deficit over the coming five financial years, with an average annual expenditure of HK$120 billion (US$15.5 billion) on public projects over the same period, up from HK$90 billion last year.