On Wednesday, Hong Kong’s Financial Secretary, Paul Chan, unveiled the 2024-25 budget, which emphasized government spending cuts while maintaining minimal impact on the public. One of the key highlights was the focus on artificial intelligence (AI) as a means to enhance Hong Kong's competitive edge in the global economy.
The government projected a consolidated deficit of HK$87.2 billion for 2024-25, an improvement from the previously forecasted shortfall of HK$100 billion. The deficit is expected to decrease further to HK$67 billion in 2025-26.
In his budget speech, Chan introduced a "reinforced version" of the fiscal consolidation program, aiming for a cumulative reduction in recurrent government expenditure by 7% from now through 2027-28. He emphasized that this would help lay a sustainable fiscal foundation for the future, while minimizing the impact on public services and citizens’ livelihoods.
As part of the government’s efforts to promote innovation, HK$1 billion was allocated to establish the Hong Kong AI Research and Development Institute. This investment highlights the government's commitment to developing cutting-edge technologies to drive economic growth.
To address government spending, Chan also announced a pay freeze for all personnel in executive authorities, the legislature, the judiciary, and Members of the District Councils for 2025-26. Additionally, the government aims to reduce its civil service by 10,000 jobs by April 2027 and increase the air passenger departure tax to HK$200 from HK$120 to boost revenue.
In a move to support the property market, the government raised the stamp duty threshold for low-end home transactions from HK$3 million to HK$4 million, effective immediately.
Looking ahead, the government forecasts moderate economic growth for the year, expecting a 2-3% rise in real terms. Over the next five years, Hong Kong's economy is projected to grow by an average of 2.9% annually, with underlying inflation at 2.5%.
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