Tag Archives: China

     Special traffic arrangements will be implemented in Happy Valley today (February 28). The arrangements will come into effect one and a half hours before the start of the first race and will last until the crowds have dispersed after the race meeting.

A. Traffic arrangements before the commencement of the first race

1. Road closure

     Southbound Wong Nai Chung Road between Queen’s Road East and the up-ramp outside the Hong Kong Jockey Club (HKJC) will be closed except for vehicles heading for Aberdeen Tunnel.

2. Traffic diversions

– Southbound Wong Nai Chung Road between Village Road and the up-ramp outside HKJC will be re-routed one way northbound;
– Traffic along eastbound Queen’s Road East heading for Wan Chai and Happy Valley will be diverted to turn left to Morrison Hill Road;
– Traffic along southbound Morrison Hill Road heading for Happy Valley will be diverted via Sports Road and Wong Nai Chung Road;
– Traffic along Queen’s Road East cannot turn right to Wong Nai Chung Road except for vehicles heading for Aberdeen Tunnel;
– Traffic from Cross Harbour Tunnel heading for Queen’s Road East will be diverted via the down-ramp leading from southbound Canal Road flyover to Morrison Hill Road to turn right at the junction of Wong Nai Chung Road and Queen’s Road East; and
– Traffic from Cross Harbour Tunnel heading for Happy Valley or Racecourse will be diverted via the down-ramp leading from southbound Canal Road flyover to Canal Road East, southbound Morrison Hill Road, Sports Road and Wong Nai Chung Road.

B. Traffic arrangements before the conclusion of race meeting

1. Road closure

     The following roads will be closed from about 35 minutes before the start of the last race:

– The up-ramp on Wong Nai Chung Road outside HKJC leading to Aberdeen Tunnel;
– Southbound Wong Nai Chung Road between Queen’s Road East and the up-ramp leading to Aberdeen Tunnel;
– Southbound Wong Nai Chung Road between Village Road and the Public Stands of HKJC;
– Westbound Leighton Road between Wong Nai Chung Road and Canal Road East; and
– Southbound Morrison Hill Road between Leighton Road and Queen’s Road East.

     In addition, southbound Wong Nai Chung Road between the up-ramp leading to Aberdeen Tunnel and the Public Stands of HKJC will be closed from about 10 minutes before the start of the last race.

2. Traffic diversions

     The following traffic diversions will be implemented from about 35 minutes before the start of the last race:

– Eastbound Queen’s Road East at its junction with Morrison Hill Road will be reduced to one-lane traffic heading for northbound Canal Road flyover;
– Traffic from Cross Harbour Tunnel heading for Wan Chai will be diverted via the down-ramp leading from southbound Canal Road flyover to Canal Road East, U-turn slip road beneath Canal Road flyover, Canal Road West and Hennessy Road;
– Traffic from Cross Harbour Tunnel heading for Happy Valley will be diverted via the down-ramp leading from southbound Canal Road flyover to Canal Road East, eastbound Leighton Road and Wong Nai Chung Road;
– Traffic along southbound Morrison Hill Road will be diverted to turn left to eastbound Leighton Road;
– Traffic along southbound Morrison Hill Road heading for Happy Valley will be diverted via eastbound Leighton Road and Wong Nai Chung Road; and
– Traffic along westbound Leighton Road will be diverted to Wong Nai Chung Road.

C. Learner drivers prohibition

     Learner drivers will be prohibited to turn left from Caroline Hill Road to Leighton Road between one and a half hours before the start of the first race and one hour after the last race. In addition, learner drivers will be prohibited from accessing the following roads within the above period of time:

– Shan Kwong Road between Yik Yam Street and Wong Nai Chung Road;
– Village Road between its upper and lower junctions with Shan Kwong Road;
– Percival Street between Hennessy Road and Leighton Road;
– Canal Road East; and
– The service road leading from Gloucester Road to Canal Road flyover.

D. Suspension of parking spaces

     Parking spaces on southbound Wong Nai Chung Road between Sports Road and Blue Pool Road will be suspended from 11am to 7pm during day racing, from 4.30pm to 11.59pm during evening racing, and from 5pm to 11.59pm during night racing.

     Any vehicles found illegally parked within the precincts of the above affected areas will be towed away without prior notice.

     Actual implementation of road closure and traffic diversion will be made by the Police at the time depending on traffic conditions in the areas. Motorists should exercise tolerance and patience, and follow the instructions of Police on site. read more

Public Finance

220. As one may recall, the Government launched several rounds of large-scale counter-cyclical and anti-epidemic measures during the pandemic, resulting in a sharp increase of expenditure to a high level of $810.5 billion in 2022-23. Although we have strived to reduce expenditure as the pandemic subsided, total expenditure for 2023-24 still reached $727.9 billion, representing an increase of 36.9 per cent compared with 2018-19, of which operating expenditure rose substantially by 40.2 per cent whereas operating revenue during the same period increased only by 13.1 per cent.

221. On capital works, the average annual expenditure has increased from about $76 billion over the past five years to about $85 billion in 2023-24. This is mainly due to the Government’s all-out effort to press ahead with the land and housing supply projects, along with other infrastructure works for improving the environment and people’s livelihood in recent years.

222. In face of challenges posed by the epidemic and external environment, our fiscal reserves have dropped to the current level of $733.2 billion. On Government’s fiscal situation, we should not just focus on the short-term situation, but should look at the fiscal position over the entire economic cycle. The Government will uphold the principle of keeping the expenditure within the limits of revenues as enshrined under Article 107 of the Basic Law, and strive to achieve fiscal balance and avoid deficits, thereby ensuring the resilience and sustainability of our public finances.

Fiscal Consolidation Programme

223. We are taking steps to implement a comprehensive fiscal consolidation programme. After taking account of the need to strengthen momentum on economic growth and the burden of businesses and the public, the programme focuses mainly on expenditure cut with a view to restoring fiscal balance in a few years’ time, although some revenue measures have been included in a pragmatic manner.

224. We will address the issue at its root by exercising stronger control over the pace of expenditure growth through re-engineering of business process or re-prioritisation. This notwithstanding, the Government will remain committed to taking care of people’s needs by continued allocation of resources for the provision and improvement of public services.
 
Contain Growth of Operating Expenditure

225. We will strictly contain growth of operating expenditure by introducing the following measures:

(a) continuing to maintain zero growth in the civil service establishment, with the aim of containing the establishment at a level not exceeding that as at end-March 2021; and

(b) implementing the Productivity Enhancement Programme as announced earlier under which recurrent government expenditure will be cut by one per cent for two consecutive years. The resources thus saved will be re-allocated internally for enhancing existing or introducing new public services. To further contain the pace of expenditure growth, on the premise that such schemes as the Comprehensive Social Security Assistance Scheme and the Social Security Allowance Scheme will not be affected, all government departments need to cut recurrent government expenditure by another one per cent in 2026-27.

226. Upon implementation of the measures to contain expenditure growth, we forecast that the growth of operating expenditure will be reduced from the annual average of seven per cent in the past five years to an annual average of 2.2 per cent in the coming five years, which is lower than the 5.5 per cent increase in GDP over the same period.
 
227. Moreover, I have requested the relevant bureaux to review the mode of operation of the following two transport subsidy schemes that incur higher expenditure with a rapid expenditure growth rate. We have to emphasise that the Government has no intention to cancel these schemes. The review aims to enable the continued provision of subsidies of the schemes in a financially sustainable manner. We anticipate that the above review will be completed within this year:

(a) Government Public Transport Fare Concession Scheme for the Elderly and Eligible Persons with Disabilities (i.e. “the $2 Scheme”): the annual expenditure of the scheme has increased by over 200% from $1.3 billion in 2019-20 to about $4 billion in 2023-24; and

(b) Public Transport Fare Subsidy Scheme: the annual expenditure of the scheme has doubled from $1.7 billion in 2019-20 to the revised estimate of about $3.5 billion in 2023-24.

228. While we are controlling the growth rate of total expenditure, the amount of resources we allocated to public services has still recorded a significant increase. For example, recurrent expenditures related to health, social welfare and education in 2024-25 amount to $343.7 billion, up by 7.3 per cent over 2023-24 and by about 34.2 per cent over five years ago.

Review and Re-prioritisation of Capital Works

229. Implementation of infrastructure projects is not only an investment for the future, it can also promote Hong Kong’s economic development and enhance people’s livelihood. In recent years, the Government has made all-out effort to press ahead with the land and housing supply projects, including new development areas and new towns, and also proposed a number of other works projects for improving the environment and people’s livelihood, such as Kai Tak Sports Park and Hospital Development Plan etc. It is estimated that expenditure on capital works will start reaching its peak in the next three years.

230. The Government needs to contain its expenditure on infrastructure works at a sustainable level. To this end, relevant bureaux and departments have reviewed the cost-effectiveness of works projects and give due regard to priority and urgency to adjust the implementation schedule. For some works projects which are at a comparatively mature stage of planning, they will continue to be taken forward by the relevant bureaux and departments as planned. They include the site formation and infrastructure works for the Northern Metropolis. As for some works projects that are currently at the preliminary planning or conceptual stage, the implementation schedule will be adjusted in light of their importance, etc.

231. In the MRF, capital works expenditure could be contained at about $90 billion per annum on average. This figure still represents an increase of about 17 per cent over the average annual expenditure of $76 billion in the last five years, which demonstrates the Government’s continued allocation of resources for capital works expenditure.

Increase Revenue

232. The key to boosting public revenue lies in sustained high-quality economic development. Only through growing the “economic pie” and enabling the economy to grow in a more robust and diversified manner can we increase our revenue to support the building of social infrastructure and people’s livelihood.

233. When considering measures for increasing revenue, we have to take Hong Kong’s actual situation into account and avoid taking any hasty actions that may affect local economic recovery and people’s livelihood while at the same time maintaining the competitive edge of the simple and low tax regime. Having considered the above factors and based on the “affordable users pay” principle, we will implement adjustments to the following individual tax items.

234. We propose to implement a two-tiered standard rates regime for salaries tax and tax under personal assessment starting from the year of assessment 2024/25. In calculating the amount of tax for taxpayers whose net income exceeds $5 million and whose salaries tax or tax under personal assessment is to be charged at a standard rate, the first $5 million of their net income will continue to be subject to the standard rate of 15 per cent, while the portion of their net income exceeding $5 million will be subject to the standard rate of 16 per cent. It is expected that about 12 000 taxpayers will be affected, accounting for 0.6 per cent of the total number of taxpayers chargeable to salaries tax and tax under personal assessment. The government revenue will increase by about $910 million each year. Even with the two-tiered standard rates regime above in place, the new tax rates will still be lower than those of other advanced economies.

235. The Government will introduce legislative amendments in the first half of this year to implement the progressive rating system for domestic properties, with the aim to bring the system into effect from the fourth quarter of 2024-25 onwards. The new system will only affect domestic properties with rateable value over $550,000, which account for about 1.9 per cent of the relevant properties. It is estimated that the system will contribute to an increase of about $840 million in government revenue annually.

236. The Government will review various fees and charges in a timely manner. Besides adhering to the “user pays” principle, the affordability of the general public and businesses will also be taken into account. Business registration fees will increase by $200 to $2,200 per annum with effect from 1 April 2024. The last adjustment to business registration fees was in 1994. We estimate that government revenue will increase by about $295 million per annum. To relieve the relevant impact, the business registration levy of $150 payable to the Protection of Wages on Insolvency Fund will be waived for two years.

237. We propose to resume the collection of the Hotel Accommodation Tax (HAT) at a rate of three per cent. It is anticipated that government revenue will increase by about $1.1 billion per annum. This will take effect from 1 January 2025 in order to allow the hotel and tourism industries more time for preparation. The HAT to be collected is estimated to only account for less than one per cent of the total spending of overnight visitors in Hong Kong. In the coming year, the Government plans to allocate over $1 billion for upgrading tourism infrastructure and services to attract more high-spending overnight visitors from different visitor source markets to Hong Kong.

Developments in International Taxation

238. We will continue to take forward the implementation of the global minimum tax proposal drawn up by the Organisation for Economic Co-operation and Development to address base erosion and profit shifting. We aim to apply the global minimum tax rate of 15 per cent on large multinational enterprise groups with an annual consolidated group revenue of at least EUR 750 million and impose the Hong Kong minimum top-up tax starting from 2025. We are now conducting consultation on the implementation of the above proposals and expect to submit a legislative proposal to LegCo in the second half of this year. It is estimated that these proposals will bring in tax revenue of about $15 billion for the Government annually starting from 2027-28. Hong Kong maintains an edge over other tax jurisdictions in terms of tax competitiveness after the implementation of the proposals.

Investment Return of the Future Fund

239. As announced in the 2021-22 Budget, the accumulated investment return of the Future Fund would be progressively reflected in the Operating Account. The Government will submit a resolution for passage by LegCo next month to complete the transfer arrangements.

Bond Issuance

240. The issuance of Government bonds is conducive to the development of the bond market and allows the use of the capital raised from the market to drive green/sustainable and infrastructure projects. I emphasise that proceeds from bond issuance will not be used for funding government recurrent expenditure.

241. The Committee on the Financing of Major Development Projects led by me has reviewed how to adopt an orderly and phased approach in developing the Northern Metropolis. We plan to issue bonds of about $95 billion to $135 billion per annum in the next five years to drive the development of the Northern Metropolis and other infrastructure projects. For the Kau Yi Chau Artificial Islands project, we will continue to conduct relevant studies, and in considering its concrete implementation timetable, we will take into account various factors including the public finance position.

242. The Government will continue to adhere strictly to fiscal discipline and keep the government debt at a prudent level. It is expected that the ratio of Government debt to GDP will be in the range of about 9 to 13 per cent from 2024-25 to 2028-29, which is much lower than most of the other advanced economies.

Concluding Remarks

243. Mr President, this year will still be fraught with uncertainties. Investment sentiment and capital flows are under the sway of the complicated and volatile external environment.

244. In the short term, we need to reinforce the momentum of our economic recovery, while in the long run, we have to adjust our economic growth model with enhancements to both “quality” and “quantity”. By charting the course of high quality development, we will drive further innovations, bring in new services and products, stimulate new demand and open up new markets. This is the necessary path to take for the future development of Hong Kong.

245. Just as nature goes through endless evolutions, so economic development has its cycles of ups and downs. New challenges and future uncertainties may be disconcerting.

246. But when we reflect on decades of development in Hong Kong, it is obvious that the path we have trodden, however winding or bumpy, has always led to a better tomorrow.

247. The colour of the cover of this year’s Budget symbolises the first glimmer of dawn, for this inspires hope, faith and our longing for greater unity and harmony.

248. We have succeeded in turning challenges into greater opportunities every step of the way. We owe every success to the strong leadership of the Central People’s Government, the staunch support from our country, as well as the agility and tenacity of Hong Kong people.

249. Our unique positioning and distinctive functions make us irreplaceable as our country strides towards high-quality development and the building of a great modern nation. And we have been playing an active role in contributing to our country’s development. Our country’s swift and steady progress, alongside a fast developing Asia, has provided us with infinite opportunities along the way. Hong Kong thrives on its cultural blend of East and West and its connectivity to the world. It is also the only place in the world where the global advantage and the China advantage come together in a single economy. So long as we know where we stand and chart the right direction, we will be able to give full play to our unique strengths. By blazing new trails and firmly pressing ahead, Hong Kong will certainly thrive and prosper, like a dragon soaring far and high in the boundless sky. Thank you, Mr President. read more

     Following is a question by Dr the Hon Wendy Hong and a written reply by the Secretary for Housing, Ms Winnie Ho, in the Legislative Council today (February 28):
 
Question:
 
     According to the paper on the budgets and financial forecasts issued by the Hong Kong Housing Authority (HA) in January this year (the paper), HA’s rental housing operating account will record a deficit for four consecutive years from 2024-2025, with the deficit concerned increasing from $1,167 million to $4,284 million in 2027-2028. In this connection, will the Government inform this Council:
 
(1) of the total income (including rental and other income) and the total expenditure (including expenditure such as property management, maintenance and improvements, government rent and rates and personal emoluments) of HA’s rental housing operating account in each of the past 10 years; whether HA has formulated the financial forecasts for 2028-2029 to 2032-2033;
 
(2) given that according to the paper, the expenditure on government rent and rates under HA’s rental housing operating account will increase substantially from $253 million in 2022-2023 to the forecasted $2,869 million in 2027-2028, representing an increase of more than 11 times, of the reasons for that;

(3) given that as indicated by the paper, the item “other recurrent expenditure” is the largest expenditure item under HA’s rental housing operating account, of the expenditure incurred by each of the sub-items of this item in 2022-2023;

(4) as HA envisages that the construction expenditure involved for meeting the 10-year public housing supply target beyond 2027-2028 will be at least double the current estimates, of the details of the public housing construction expenditure and the sources of funding envisaged by HA for each of the coming 10 years, together with a breakdown by public rental housing and subsidized sale housing; and
 
(5) given that according to the paper, the Government has earmarked $82.4 billion in the fiscal reserves for the development of public housing and related infrastructure, of the conditions under which the Government will inject the funds reserved into HA; given the current consolidated fiscal deficit of the Government, whether the Government will undertake to avoid using the funds reserved as far as possible; if so, of the details; if not, the reasons for that?
 
Reply:

President,
 
     Regarding the question from Dr the Hon Wendy Hong, our reply is as follows:
      
(1) The Hong Kong Housing Authority (HA)’s Rental Housing Operating Account for the past ten years (i.e. 2013-2014 to 2022-2023) are in Annex 1. It is established practice for the HA to formulate its Budget for the next financial year and financial forecasts for the subsequent three years at the beginning of each year. As such, the HA endorsed at its meeting on January 16, 2024, the paper which set out the five-year budgets and forecasts for the period from 2023-2024 to 2027-2028. At this stage, we are not able to project the expenditure and income more accurately for 2027-2028 beyond. We will review the income and expenditure projections for the next few years in the next round of financial forecasts update.

(2) In the past ten years, the actual annual expenditure on government rent and rates under the Rental Housing Operating Account ranges from $176 million to $1,120 million, including the rates concessions provided by the Government in various years (see Annex 2). In accordance with the established mechanism, the HA assumes no rates concession in preparing the financial forecasts for Rental Housing operation from 2024-2025 to 2027-2028.

(3) A breakdown for “Other recurrent expenses” of $5,754 million under the Rental Housing Operating Account in 2022-2023 is as below: 
 

	(in $ million)
Cleaning and security services	2,587
Management fee for estate common area	780
Estate property management	748
Electricity	639
Management fee under Tenants Purchase Scheme estate	293
Administrative fees and other expenses	707
Total	5,754

 
(4) The latest estimated construction expenditure for the HA’s public housing development programme from 2023-2024 to 2027-2028 is set out below:
 

	2023-24  (in $ million)	2024-25 (in $ million)	2025-26 (in $ million)	2026-27 (in $ million)	2027-28 (in $ million)
Public rental housing	11,593	17,285	21,372	22,768	21,544
Subsidised sale flats	6,710	9,010	10,743	10,978	12,632
Others	3,601	5,330	5,832	6,142	6,650
Estimated total construction expenditure	21,904	31,625	37,947	39,888	40,826

 
     Under the latest budgets and financial forecasts, the HA will be able to meet the construction expenditure up to 2027-2028, covering the financial commitments of building around 110 000 public housing flats. It should however be pointed out that the current 10-year public housing supply plan is back loaded, with two-third of the production target to be completed in the second five-year period. It is expected that construction expenditure in 2028-2029 and the subsequent years will continue to increase.
 
     Since most of the sites for the public housing development projects in 2028-2029 and beyond are still in the early study/land production stage, it is difficult to give more reliable expenditure forecasts at this stage.
 
(5) The HA is a financially autonomous public body and the public housing programmes are sustained through internally generated funds. Under the latest budgets and financial forecasts, it is projected that the HA can meet its expenditure up to 2027-2028 including construction expenditure.

     The HA’s major income comes from public rental housing, commercial premises rents and sales of Home Ownership Scheme and Green Form Subsidised Housing flats, whereas construction expenditure is the HA’s largest expenditure item. Construction expenditure will continue to rise due to both increase in housing production and rising prices of construction works for some time in future.

     The HA will exercise careful and serious budgetary control to ensure prudent and cost-effective use of resources, and explore various cost control/saving and revenue-boosting measures. The HA will review and update its income and expenditure projections in the next round of financial forecasts updating. read more

A Caring and Inclusive Community

Youth Development

194. Young people are Hong Kong’s future. “Hong Kong will prosper only when its young people thrive.” The Government is actively implementing the various actions and measures set out in the Youth Development Blueprint in phases. We will also open up more Mainland and overseas exchange and internship opportunities for young people. Our target is to benefit no less than 30 000 youths this year, enabling young people to learn about our country’s major development trends and broaden their global exposure. The Government will also organise the Youth Development Summit in mid this year. Mainland and overseas youth organisations will be invited to exchange views on issues of concern to young people and to engage in mutual learning. It is anticipated that more than 1 000 people will participate in the Summit.

Vocational and Professional Education and Training

195. The Government will continue to foster industry-institution collaboration and diversified development to enhance vocational and professional education and training (VPET). The Government has set aside some $680 million to support the Vocational Training Council’s efforts. Initiatives include extending the Pilot Incentive Scheme to Employers and the Pilot Subsidy Scheme for Students of Professional Part-time Programmes for five years, as well as stepping up support for student-exchange activities, strengthening assistance to students with special educational needs and encouraging employers to provide workplace learning opportunities, etc.

196. Furthermore, the Government has also set aside a start-up fund of $100 million to support self-financing, post-secondary institutions in forming an Alliance of Universities in Applied Sciences for joint publicity and promotion of VPET, and raise the status of VPET among parents, students and society in general.

Caring for the Elderly

197. The Government has regularised the Community Care Service Voucher (CCSV) Scheme for the Elderly since September 2023, and extended its scope to cover the rental of assistive technology products. The number of CCSVs will increase to 11 000 in 2024-25, involving an annual expenditure of about $900 million. The Government also regularised the Residential Care Service Voucher (RCSV) Scheme for the Elderly since last April. From the second quarter of this year, the number of RCSVs will increase to 5 000 for the early benefit of more eligible elderly persons. The scheme will involve an annual expenditure of about $1,440 million.

Support to Persons with Disabilities

198. The Government is committed to increasing the number of day rehabilitation, residential care and respite service places for persons with disabilities. As at end-2023, the total number of service places had been increased to 36 400. The Government will also allocate funding of about $130 million from the Community Care Fund to implement a three-year pilot scheme starting from the third quarter of 2024 to provide an additional subsidy of $500 per month for employed disabled recipients of CSSA as an incentive for employment. The scheme is expected to benefit some 6 800 persons.

Women’s Development

199. The Government attaches great importance to women’s development, setting aside $100 million last year to strengthen support for the relevant work. The Women Empowerment Fund, established in June 2023, has so far provided funding support to women’s organisations and non-governmental organisations for launching over 140 projects for purposes such as helping women assume different roles in the job market and providing them with training on child and elderly care.

Assist Working Families in Childbearing

200. Starting this year, the Government will set up 10 more aided, standalone child-care centres, in phases. The target is to provide nearly 900 additional places for child day-care services within three years. The Government will also extend the After School Care Programme for Pre-primary Children in phases, starting this year, to cover all districts in Hong Kong. The number of service places will increase to nearly 1 200 within three years.
 
Revised Estimates for 2023-24

201. Hong Kong’s economic growth last year was slower than expected owing to global interest rate hikes, economic slowdown and continued geopolitical tensions. Notwithstanding a reduction in total government expenditure after the pandemic, revenue from land premium and stamp duty has decreased under a softened asset market, resulting in a larger deficit than expected.

202. The 2023-24 revised estimate on government revenue is $554.6 billion, lower than the original estimate by 13.7 per cent or $87.8 billion.

203. Revenue from land premium is $19.4 billion, substantially lower than the original estimate by $65.6 billion and also far lower than the previous year. Revenue from stamp duty of $50 billion is lower than the original estimate by $35 billion. Revenue from profits tax and salaries tax is $171.2 billion and $79.2 billion respectively, comparable to the original estimates.

204. The revised estimate of total government expenditure for 2023-24 is $727.9 billion, decreased by 10.2 per cent compared to the previous year, and is 4.3 per cent or $33.1 billion lower than the original estimate.

205. All in all, it is expected that there will be a consolidated deficit of $101.6 billion for 2023-24. Fiscal reserves are expected to be $733.2 billion by 31 March 2024.
 
Estimates for 2024-25

206. Looking ahead, the external environment will remain complicated in the coming year. As a small and externally-oriented economy, Hong Kong’s economic growth will inevitably be affected. Revenues related to asset market will still require some time to fully recover. On the expenditure side, the Government will continue to provide resources for strengthening momentum on economic growth and enhancing public services.

207. The major policy initiatives announced in the 2023 Policy Address involve revenue of about $14.2 billion, operating expenditure of $13.4 billion and capital expenditure of $25.2 billion. The financial implications of such initiatives have been reflected in the estimates for 2024-25.

208. Total government expenditure for 2024-25 will increase by about 6.7 per cent to $776.9 billion, with its ratio to nominal GDP projected to increase slightly to 24.6 per cent.

209. Recurrent expenditure will increase by seven per cent to $580.2 billion. Of this, substantial resources will still be allocated to livelihood-related policy areas including health, social welfare and education, involving a total of $343.7 billion, representing 59.3 per cent of recurrent expenditure. After the pandemic, non-recurrent expenditure will substantially decrease by 47.7 per cent to $33.6 billion.

210. Total government revenue for 2024-25 is estimated to be $633 billion, while earnings and profits tax are estimated to be $279.6 billion, increasing by 6.8 per cent over the revised estimate for 2023-24. Having regard to the Land Sale Programme and the land supply target of 2024-25, revenue from land premium is estimated to be $33 billion, increasing by 70.1 per cent over the revised estimate for 2023-24. Revenue from stamp duty is estimated to be $71 billion, increasing by 42 per cent over the revised estimate for 2023-24.

211. Taking into account the bond issuance of $120 billion in 2024-25, it is expected that there will be a deficit of $48.1 billion for the year, and fiscal reserves will decrease to $685.1 billion.

212. In 2024-25, the Government will maintain its target of zero growth in the civil service establishment. Departments will enhance their effectiveness and efficiency through reprioritisation, internal redeployment and streamlining of work processes in taking forward different new policies and initiatives of the Government. It is expected that there will be about 194 000 posts in the civil service establishment as at end-March 2025.
 
Medium Range Forecast

213. We are determined and confident in overcoming the challenges currently facing our public finances. The fundamental principle that we follow is to maintain the sustainability of public finances. We have formulated a fiscal consolidation programme to achieve fiscal balance gradually and maintain fiscal reserves at a prudent level for ensuring the provision of various services to the society and promotion of economic development while also having sufficient buffer to roll out measures for rendering assistance to the public and enterprises at times of adversity or in other emergency situations.

214. The Medium Range Forecast (MRF) projects, mainly from a macro perspective, the revenue and expenditure as well as financial position of the Government. It has fully reflected the impact of the measures under the fiscal consolidation programme. For 2024-25, a real economic growth rate of 2.5 to 3.5 per cent per annum is adopted. From 2025-26 to 2028-29, a real economic growth rate of about 3.2 per cent per annum is adopted.

215. During the above period, the average annual capital works expenditure will be about $90 billion, while recurrent government expenditure will grow at a rate of 4.2 per cent per annum. The ratio of total government expenditure to GDP will gradually fall from about 24.6 per cent for 2024-25 to about 20.6 per cent for 2028-29.

216. Regarding revenue from land premium, the forecast for 2025-26 and onwards is mainly based on the more conservative 20-year average ratio of revenue from land premium to GDP, which is 3.4 per cent of GDP. I also assume that the growth rates of revenue from profits tax and other taxes will correspond to the economic growth rates in the next few years. Overall, the ratio of government revenue to GDP will gradually increase from about 20 per cent for 2024-25 to about 22.6 per cent for 2028-29.

217. In addition, the MRF reflects the proceeds from the annual issuance of government green/sustainable bonds and infrastructure bonds worth approximately $95 billion to $135 billion in total.

218. Based on the above assumptions and arrangements, the deficit in the Operating Account and Capital Account in the next five years will gradually reduce every year. The Operating Account is estimated to record a surplus two years later from 2026-27 onwards, while the Capital Account will record surplus in 2028-29. After taking account of proceeds from the issuance of bonds, the Consolidated Account will only record a deficit in 2024-25 and will turn to a surplus in subsequent years. The above forecast has not taken into account any tax rebates or relief measures that the Government may implement over the coming four years.

219. Fiscal reserves are estimated at $832.2 billion by the end of March 2029, representing 21.2 per cent of GDP, or equivalent to approximately 12 months of government expenditure.

(To be continued.) read more

The following is issued on behalf of the Hong Kong Monetary Authority:      The Hong Kong Monetary Authority (HKMA) today (February 28) issued guidelines to banks adjusting the countercyclical macroprudential measures for pr… read more