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Hong Kong budget 2026-27
OpinionHong Kong Opinion
Regina Ip
Opinion
Regina Ip

Paul Chan must deliver the fiscal discipline Hong Kong needs

Fiscal prudence is vital if Hong Kong is to fund the Northern Metropolis and other costly development plans in an uncertain geopolitical climate

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A view of the Hung Shui Kiu development area, part of the Northern Metropolis project. Photo: Sam Tsang
Regina Ip
Regina Ip Lau Suk-yee is convenor of the Executive Council and chairwoman of the New People’s Party.
Financial Secretary Paul Chan Mo-po delivered his latest budget on February 25. Over the past decade, under his stewardship, Hong Kong has weathered multiple economic shocks and recently returned to a respectable growth rate of 3.5 per cent. Yet the tasks ahead are formidable: addressing a structural fiscal deficit in the city’s capital account while ensuring sufficient resources for future growth, all against an increasingly volatile and dangerous global backdrop.

Article 107 of Hong Kong’s Basic Law requires the government to “follow the principle of keeping the expenditure within the limits of revenues in drawing up its budget, and strive to achieve a fiscal balance”.

Chan, however, was not the architect of significant expansions in recurrent public spending. Since the 2010s, successive chief executives have ratcheted up expenditure on services for the elderly as legislators cried out for help for the growing population of seniors. A prominent example is the public transport fare concession scheme for the elderly and other eligible persons, introduced in June 2012. Its cost has surged from an estimated HK$255 million (US$32.5 million) in 2012–13 to around HK$5.5 billion in 2026–27.

Fiscal pressures were intensified by the package of initiatives for underprivileged groups announced in January 2020 by then chief executive Carrie Lam Cheng Yuet-ngor. Measures such as more generous old-age allowances and lowering the qualifying age for transport concessions to 60 are estimated to have added at least HK$100 billion annually to public expenditure, increasing the government’s long-term fiscal burden.

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