FS signals early return to operating surplus, urges fiscal prudence ahead of budget

Financial Secretary Paul Chan will deliver the Budget on February 25th.

He says Hong Kong's operating account is expected to return to surplus earlier than anticipated -- buoyed by a surge in stamp duty as a result of active stock trading.

However, he stresses that bond issuance will still be needed to fund infrastructure development, and with geopolitical tensions remaining complex, prudent fiscal management is essential.

In the first nine months of this fiscal year, the government logged a surplus of over 40 billion dollars.

Financial Secretary Paul Chan says the improvement was ratcheted up by a stronger financial market, with stock stamp duty revenue expected to reach nearly 100 billion dollars.

That allows Hong Kong to return to an operating account surplus sooner. With the public consultation on the new Budget under way, Chan says he understands calls from different sectors of society for measures such as tax relief.

But the government must balance competing priorities.

Speaking on a radio programme, the finance chief compares fiscal discipline to weight control, noting it is easy to loosen spending but difficult to rein it back in.

He stressed the need for sustained discipline in containing expenditure growth, while avoiding measures that could be perceived as unfair or unbalanced.

He adds that development of the Northern Metropolis must be accelerated, and there are major infrastructure projects, which will require bond issuance under the capital account.

He notes that fiscal buffers are also necessary given the current geopolitical uncertainties.

Still, he says he's cautiously optimistic about the economic outlook for the year ahead with signs of stabilisation in the property market, while the stock market reflects renewed confidence among overseas investors in Hong Kong.

That's despite sectors such as catering and retail remaining under considerable pressure, he admits.

He noted that as the economy improves, overall wages have risen, and that measures to integrate resources have helped contain growth in the civil service.