Date
15 October 2018
Delivering his budget speech Wednesday, Hong Kong's Financial Secretary Paul Chan said he is 'cautiously optimistic' about the city's economic prospects going forward. Photo: CNSA
Delivering his budget speech Wednesday, Hong Kong's Financial Secretary Paul Chan said he is 'cautiously optimistic' about the city's economic prospects going forward. Photo: CNSA

Land premiums, stamp duties help HK reap record budget surplus

The Hong Kong government expects to post a budget surplus of HK$138 billion for the current financial year to March, a record figure that will help propel the city’s fiscal reserves past the one-trillion-dollar mark, to an estimated HK$1,092 billion.

In his budget speech Wednesday, Financial Secretary Paul Chan said the massive budget surplus is mainly due to much higher-than-expected revenues from land premium and stamp duties.

Land premium income is expected to total HK$163.6 billion, 62 percent higher than the original estimate. Revenue from stamp duties would be 75 percent higher than estimated, reaching HK$92.7 billion.

The 2017-18 revised projection on government revenue is HK$612.4 billion, 20.6 percent higher than the original estimate.

Hong Kong’s economy grew by 3.8 percent last year, higher than the average trend growth rate of 2.9 percent over the decade from 2007 to 2016, Chan noted. In another sign of economic growth, the unemployment rate has dropped to a 20-year low of 2.9 percent.

Chan said he is “cautiously optimistic” about the prospects for the economy in the future.

“Sanguine local economic sentiment and positive business confidence should sustain investment growth,” he said, forecasting economic growth of three to four percent for the city this year.

On inflation, Chan said he thinks the local cost pressures will go up amid sustained economic growth. Headline inflation figure is seen at 2.2 percent with underlying inflation rate at 2.5 percent.

Chan voiced some concern about global financial markets, urging investors to “stay vigilant”.

On the city’s property market, he believes the key factors underpinning soaring property prices over the past few years are gradually undergoing fundamental changes, highlighting that the ultra-low interest rate environment of the past few years “will no longer persist”.

Chan stressed that the government will keep a close watch over changes in the property market.

During his budget speech, the finance chief said: “No abundance of resources would ever enable the government to satisfy the needs of all,” adding that he must be “proactive, innovative and bold in investing for the future of Hong Kong.”

Chan said he plans to share 40 percent of the annual surplus with society and use the rest to improve services and invest in the future.

– Contact us at [email protected]

BN/RC

EJI Weekly Newsletter

Please click here to unsubscribe