Hong Kong Budget Focuses On Spending Cuts, Promoting AI

(RTTNews) - Hong Kong Financial Secretary Paul Chan unveiled the budget on Wednesday that largely focused on government spending cuts with minimal impact on people's livelihood and underscored the importance of artificial intelligence to enhance competitive edge.

The government estimated a consolidated deficit of HK$87.2 billion for 2024-25, which was smaller than the HK$100 billion shortfall projected previously. The deficit is forecast to fall to HK$67 billion in 2025-26.

"I propose a "reinforced version" of the fiscal consolidation program, including a cumulative reduction of government recurrent expenditure by seven percent from now through 2027-28," Chan said in his budget speech.

"While laying a sustainable fiscal foundation for future development, this approach represents our all-out effort to minimize the impact on public services and people's livelihood," Chan added.

Chan set aside HK$1 billion for the establishment of the Hong Kong AI Research and Development Institute.

In order to reduce government expenditure, Chan announced a pay freeze for all personnel of executive authorities, the legislature, the judiciary and Members of the District Councils in 2025/26.

The government aims to cut 10,000 civil service jobs by April 2027 and also plans to raise air passenger departure tax to HK$200 from HK$120 to boost revenue.

The property tax for low-end home transactions was reduced. The maximum value of properties chargeable to a stamp duty of HK$100 will be raised to HK$4 million from HK$3 million with immediate effect.

The government expects the city's economy to continue to grow moderately this year, rising by 2 to 3 percent in real terms for the year.

On an average, the economy is forecast to grow 2.9 percent a year from 2026 to 2029. The underlying inflation rate is forecast to be on average 2.5 percent a year.

In the fourth quarter, the city-state economy logged a faster growth of 2.4 percent after rising 1.9 percent in the preceding period.

Quarter-on-quarter, GDP grew 0.8 percent, in contrast to the 0.1 percent fall a quarter ago.