Hong Kong must look beyond bond issuances to cover government spending, ex-finance chief says, warns city is in ‘structural deficit era’

Former financial secretary John Tsang says revenue-boosting measures from new budget ‘a drop in the bucket’ compared with tens of billions needed to balance books

‘It is impossible to imagine any measures [to boost revenue] that will not cause great pain, and none of them will be easy to implement,’ he warns

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Economists have also urged the government to consider revising its tax policies to help bring in more revenue. Photo: Elson Li

Published: 10:29pm, 3 Mar 2024Updated: 12:24am, 4 Mar 2024

Hong Kong must find revenue sources other than bond issuances to cover government spending, a former finance chief has said, warning the city has entered an “era of structural fiscal deficits”.

John Tsang Chun-wah, who served as financial secretary from 2007 to 2017, wrote on social media on Sunday that revenue-boosting measures announced in last week’s budget were “a drop in the bucket” compared with the tens of billions needed to balance the books.

Financial Secretary Paul Chan Mo-po said last Wednesday that the government planned to issue HK$120 billion (US$15.3 billion) in silver, green and infrastructure bonds for the 2024-25 financial year.

The figure was then expected to range from HK$95 billion to HK$135 billion annually for the subsequent four years.

The proposal aims to plug a shortfall in public finances, which are only expected to achieve a surplus in 2027-28.

The deficit will be HK$101.6 billion for this financial year, far higher than the previous estimate of HK$54 billion, amid a substantial reduction in land premiums and income from stamp duty.