Hong Kong hits operating surplus as fiscal reserves rise: S&P

Economic growth and market activity underpin surplus and infrastructure plans.

Hong Kong recorded an operating surplus for fiscal year 2025, ending March 2026—ahead of the original estimate—supported by economic growth, stock market activity, and finances backing infrastructure plans, according to S&P Global Ratings.

S&P projects a consolidated fiscal deficit of 3% of GDP in fiscal 2025 and 2% in fiscal 2026, driven by capital spending in the Northern Metropolis.

Annual capital project expenditure will exceed $200b from fiscal 2026, accounting for one quarter of government spending.

Revenue sources shifted as land sales fell, with land premium revenue dropping below 3% of total revenue in fiscal 2025, compared to one fifth pre-pandemic. Growth in profit tax and equity market activity offset this decline.

Stamp duty revenue is expected to remain strong through fiscal 2026 as Chinese companies pursue Hong Kong listings amid U.S.-China dynamics. Budget measures for digital finance and artificial intelligence further support revenue collection.

Fiscal reserves are set to increase at the end of fiscal 2025—the first rise since 2021—with consolidated deficits averaging 1.8% of GDP from fiscal 2026 to 2029, down from 6.2% from 2022 to 2024.

The government plans to transfer $150b from the Exchange Fund over two years, including land development partnerships with the private sector to manage costs.