Hong Kong Plans Budget Cuts to Address Record Deficits

Hong Kong is set to unveil spending cuts in its upcoming annual budget as it grapples with a fiscal deficit that has likely doubled its initial target amid global economic uncertainty and a struggling property market. Economic growth has slowed to 2.5% in 2024 from 3.2% the previous year, with the city facing significant revenue declines from land premiums, which have dropped to about 5% of government income. Financial Secretary Paul Chan emphasized a focus on cost-saving measures, including potential civil service salary reductions, as the city aims to address a projected deficit of nearly HK$100 billion ($13 billion) for the fiscal year ending in March. Experts note that Hong Kong's fiscal challenges are compounded by a decline in its international reputation and competition from nearby economies like Singapore, which have fared better. The government is also exploring options to raise capital through tax adjustments and new revenue streams, such as legalizing sports betting. The situation calls for careful fiscal management to ensure long-term sustainability amidst ongoing U.S.-China tensions and economic headwinds.