HONG KONG - The Hong Kong government must seek to foster economic growth, and align the growth rates of government revenue and government expenditure, to maintain healthy overall fiscal position, Hong Kong's financial secretary John Tsang said Wednesday.
"If government expenditure keeps growing and outpacing economic and revenue growth, a structural deficit would be inevitable," Tsang said in his budget speech.
With the city's population ages, its economic growth momentum is expected to slow down. Over the next 20 to 30 years, Hong Kong' s nominal gross domestic product (GDP) will grow at an average rate of 4.4 percent per annum; real GDP will grow at a trend rate of 2.8 percent per annum, which is a notch higher than most other mature economies, according to Tsang.
He suggested that public expenditure be controlled at or around 20 percent of GDP. "It is a suitable level as it ensures that the government will not consume excessive social resources and that government expenditure will be kept at a level commensurate with government revenue," Tsang said.
He said the government should implement a combination of measures, including containing expenditure growth, preserving the revenue base and saving for future generations, to cope with the fiscal challenges ahead.
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