Hong Kong to see budget deficit again in 2021-22 financial year

HONG KONG -- The government of China's Hong Kong Special Administrative Region (HKSAR) is expected to see a deficit of 101.6 billion Hong Kong dollars (about $13 billion) for the 2021-22 financial year, the third straight year with a budget deficit.

When unveiling the annual budget in the Legislative Council, Paul Chan, financial secretary of the HKSAR government, said the deficit, equivalent to 3.6 percent of the local gross domestic product (GDP), comes as the government has boosted expenditures for the handling of the COVID-19 pandemic and economic reliefs.

The global financial hub registered the first deficit in the 2019-20 financial year after reporting a surplus for 15 years in a row and continued to see an estimated deficit of 257.6 billion Hong Kong dollars for the 2020-21 financial year.

Over the past two years, Hong Kong's fiscal reserves also dropped sharply from the equivalent of 23 months of government expenditure to 13 months.

However, given lingering COVID-19 impacts, the HKSAR government will continue to roll out a series of measures for supporting individuals and businesses.

Chan said the HKSAR government spending in education, social welfare and healthcare combined will come to 302.3 billion Hong Kong dollars for the 2021-22 financial year, accounting for 58 percent of the total estimated recurrent expenditure and representing an increase of 45 percent from four years ago.

In the medium term, Chan forecast a deficit in the operating account in each of the coming five financial years through 2025-26.

Fiscal reserves are estimated to be at 775.8 billion Hong Kong dollars by the end of March 2026, representing 22 percent of GDP, or equivalent to 12 months of government expenditure, he said. (1 US dollar equals 7.75 Hong Kong dollars)