Hong Kong's revenue forecast cut to $560b for 2024-25

Fiscal reserves are expected to drop to $647.3b by 31 March

Hong Kong’s government has revised its 2024-25 revenue estimate to $559.6b, 11.6% lower than originally forecast, according to Financial Secretary Paul Chan Mo-po’s budget speech delivered today.

Despite stable earnings from profits tax ($177.7b) and salaries tax ($88b), lower revenues from land premiums ($13.5b, down $19.5b) and stamp duties ($58b, down $13b) contributed to the shortfall.

Total government expenditure for 2024-25 is estimated at $754.8b, $22.1b lower than originally expected. 

After accounting for $130b in bond issuance and $22.1b in repayments, the government anticipates a consolidated deficit of $87.2b for the fiscal year. 

Fiscal reserves are expected to drop to $647.3b by 31 March.

For 2025-26, the government expects total revenue to increase to $659.4b, driven by an 8.4% rise in earnings and profits tax ($301.2b), a 55.3% increase in land premium revenue ($21b), and a 16.5% rise in stamp duty collections ($67.6b). 

An additional $62b will be drawn from six endowment funds.

Total expenditure is set to rise 8.9% to $822.3b, with recurrent spending up 4.5% to $588.1b, of which $348.6b (60%) will go to healthcare, social welfare, and education. Non-recurrent spending is projected to decline by 3.4% to $36.1b.

The government plans to issue $150b in bonds whilst repaying $54.1b, leading to an expected fiscal deficit of $67b for 2025-26, bringing reserves down to $580.3b.