Opinion | Hong Kong deserves the hard truth about its finances
- When the government presents budget deficit figures on a net basis, it can create a false impression of abundance
- At a time when revenue is soft, it’s surely more effective to tell the truth, so that sound decisions can be made about revenue and expenditure
In fact, the underlying situation is even more challenging than reported and I would not be surprised by a real deficit closer to HK$200 billion (US$25.6 billion).
The final deficit for 2022-23 was HK$205.8 billion, though the cashflow position was helped by bond sales of HK$66 billion, leaving a net shortfall of HK$139.8 billion.
In his budget speech early this year, Chan said that taking into account the proceeds from the issuance of government bonds of about HK$65 billion, he was forecasting a deficit of HK$54.4 billion for 2023-24. This means the shortfall before the bond issuance was estimated at around HK$119 billion.
At the halfway point in this financial year, the government reported cumulative revenue of HK$131.3 billion and expenditure of HK$355.6 billion, leaving a deficit of HK$224.3 billion. Bond sales of HK$46.6 billion reduced the shortfall to HK$177.7 billion. It would be too simplistic to just double those numbers to derive a full-year forecast as much revenue from profits and salaries taxes comes in the second half.
